‘Tis the season to wrap up the year while still keeping in mind your holiday business expenses. You don’t have to be a Scrooge; there are some ways to enjoy the holiday season while still getting the most out of it.
It can become challenging to know what should be considered a business deduction when it comes to holiday expenses, but that’s where we come into play. Keep on reading below to find out about holiday business expenses for taxes!
1. Don’t Skip the Party
If you’ve not made arrangements for your company holiday party, you need to get on it. If you want to treat your employees, but treat yourself simultaneously, writing off your company’s holiday party is a way to do that.
We all want to spread the holiday cheer, but there are some things to keep in mind when hosting your holiday party. The first thing is if you’re going to write the party off, it’s got to be for people that work in the company only.
If you invite people outside of the company, you fall outside of the requirements set by the IRS to count the party as a deductible. As you plan, keep expenses reasonable and keep accurate records of the party to provide as evidence during tax time.
2. Give the Gift That Keeps Giving Within Reason
Everyone wants to receive a gift during the holiday season; it’s a part of the magic and wonder, but don’t go overboard. According to the IRS website, you can spend a max of $25 per person for it to count as a deductible.
Again, keep a running record of the gifts you give because if you’ve already given a gift to someone earlier in the year, you can’t deduct another gift expense for them.
Volunteering or other forms of giving are lovely during the holiday season, and it can count as a deduction towards your holiday expenses. If you’re going to donate money to an organization, ensure you’re giving to a qualified nonprofit group.
You can also volunteer and deduct the costs of the supplies needed to perform the volunteer work. As you document your companies volunteer work, you’ll need to collect and save things like:
- Purchase receipts
- Bank record statements
- Written acknowledgments when applicable
To claim the deduction, physical evidence will need to be collected to ensure you’ve met all the guidelines before the deduction is applied.
Holiday Business Expenses 101
Just because the holidays are here doesn’t mean you can’t find ways to save money. As long as you keep accurate documentation of everything you do, from the holiday parties to the gifts you gift, the deductions will come pouring in.
Not sure what you can claim as a deduction? Contact Doerhoff & Associates CPA. Not only can we help you with tax preparation and other accounting needs, but we can also fill you in on which business expenses count as deductibles.