My accountant said my 'client gifts' write-offs were a red flag

I used to buy $200 gift cards for big clients around the holidays and write them off as a business expense. My new CPA in Austin looked at my books and flat out said, 'The IRS sees that as a personal benefit, not a deductible cost.' I changed it to only writing off branded swag I give at meetings. Has anyone else had to rework their gift strategy after an audit scare?

4 comments

4 Comments

stella221mo ago

Yeah, my old bookkeeper warned me about that too lol. She said the IRS treats gift cards like cash, so they're a huge no-go for write-offs. Swag is definitely the safer move.

derek_hill1mo ago

Totally get why your CPA freaked out. The IRS rule on gifts is stupidly specific. You can only deduct up to $25 per person per year for actual gifts, and gift cards almost never count. Swag is safer, but even then, you need to track it. I keep a box of cheap branded pens and notebooks for this exact reason, and I note who got what and when. It's a pain, but it beats getting a letter from the tax man.

thea6024d ago

My audit was basically a swag inventory check.

shane3271mo ago

Man, I've never had an issue just writing off a reasonable client lunch. The whole pens and notebooks thing seems like overkill to me. As long as you're not buying everyone TVs, it usually works out fine.