Theresa Arndt, CPA

During the holiday season many business owners give gifts to their clients, prospective clients or employees to thank them for their business or show appreciation for their hard work.      But did you know your deduction for that business gift is limited to $25?   The basic rule is that if you give someone a gift for business purposes, your business expense deduction is limited to $25 per person per year.   Any amount over the $25 limit is not deductible.   If this amount seems low, it is.   That’s because it was established in 1954.      Most taxpayers are at least vaguely aware of this tax rule.   But what isn’t as widely known is that there are a few exceptions and work-arounds to this rather restrictive limit.      Here’s a quick rundown of the major exceptions to the $25 limit.   Companywide gifts   The $25 limit applies only to gifts to individuals, either directly or ind...

In June, the IRS announced an increase in the standard mileage rates for the final six months of 2011 .    In their news announcement, the IRS wrote, “This year’s increased gas prices are having a major impact on individual Americans so the IRS is adjusting the standard mileage rates to better reflect them.” For your convenience, here are the mileage rates for 2011: ·          Business: 55.5 cents per mile (Compared to 51 cents for 1 st six months) ·          Medical: 23.5 cents per mile (Compared to 19 cents for 1 st six months) ·          Moving: 23.5 cents per mile (Compared to 19 cents for 1 st six months) ·          Charitable: 14 cents per mile (Unchanged) Taxpayers can use one of two methods to deduct vehicles expenses: standard mileage rate and actual expense method.   Traditionally I have ...