December 22nd, 2011 Amanda Han CPA (Taxloopholes.com Tax Strategist)
Hopefully you are enjoying this wonderful holiday season. With the tree lit-up and the fireplace going, Uncle Sam may be the last thing on your mind. Of course for the team here at Keystone CPA, Inc., we never give up an opportunity to save taxes… even during the holiday season!
With the holiday season fast-approaching, why not take a unique approach to annual gift giving with some Tax Savvy Holiday Ideas this year?
Instead of buying another blue blouse for Christmas, why not consider holiday gift ideas that can be a tax deduction for your business? As a business owner, you may want to buy that new double monitor, or a Persian rug for the office. Even a briefcase can be a tax deduction. The most common item we see this year as a top business gift has been the iPad 2.
If you are in the market for bigger items that are needed for your business, don’t forget about the 100% bonus depreciation. This tax benefit allows the business to take a 100% dollar for dollar write-off on brand new assets purchased for the business. Rather than having to depreciate the cost of the asset over multiple years, you may be able to take a 100% write-off all in the 2011 year. This is huge and can be a great gift if your business is in the market for some new furniture or equipment.
How about buying that brand new SUV for your business and getting a 100% write-off for it this year? That is one holiday gift that is sure to bring a big smile. Remember: The 100% bonus depreciation is scheduled to expire as of December 31, 2011 so make sure you are using it expires.
We all know that during the holiday seasons, cash flow may be tight for a lot of businesses. If you don’t have excess cash to make that big bonus payout this year, think of other Tax Savvy ways to reward your employees. Consider giving them more paid time off during the holidays as one good way to reward your employees rather than bonus payouts. Alternatively, you may consider giving your employees that new double monitor or the new computer speaker set that they have been asking for.
Around the holiday season is when you may be sending out holiday gifts to your vendors and customers. Generally, business gifts have a maximum tax deduction of $25 per recipient. One way around this that allows you to provide good holiday gifts and keep them as tax deductible is to qualify these as advertising and promotional items. The reason you want these to qualify as marketing and promotional items is to avoid the $25 per person tax deduction limit that are imposed on business gifts. One easy way to do so is to simply incorporate your company logo and contact information to the gift itself. Consider engraving your name and logo to the gift or if you are sending a holiday basket, wrap it with your logo ribbon for branding purposes.
During the holiday season, now is the time that most of us hold holiday parties for the office. Generally meals and entertainment are limited to 50% for tax deduction purposes. However, one exception to this rule is for employer-provided social or recreational expenses for the benefit of employees. These types of expenses are 100% tax deductible and a holiday party generally can qualify for this tax perk.
This holiday season, we encourage you to get creative and utilize some of these Tax Savvy Holiday Ideas for gifts, employee rewards, customer appreciation, and holiday fun!
If you have any questions, we are here to help! Don’t forget to check out our new Tax Savings Tools and Free eBook at www.Taxloopholes.com.