Gift Giving & Receiving

Gifts are a great gesture to display your appreciation, but how does this translate to business?

Gift giving in the professional space does indeed have some strings attached. Let’s dive into ethics and more specifically, IRS Publication 463 which outlines the tax instructions for travel, gift and car expenses.

Based on the 2024 publication, gifts have a $25 deduction limit for each individual during the course of the tax year. This includes both direct and indirect gifts. What constitutes a direct or indirect gift? A direct gift can be a physical gift or experience that is transferred to a person; think merchandise, gift cards, or access to a paid event. An indirect gift can be a physical gift or experience that is transferred, with your knowledge, to someone or something related to you because of the gift giver’s relationship to you; think a donation to your favorite charity or paying a debt for someone. For more information on gifts, consult IRS Pub. 463 here.

There are some industries in business where individuals are not able to accept certain types of gifts as they may be seen or interpreted as a bribe or have the potential to create a bias. An example for this applies to licensed medical providers. According to the AMA Code of Medical Ethics, there are three kinds of gifts that should be declined. Cash gifts, any gift that implies reciprocity and in-kind (goods or services) gifts. Personally working with doctors and medical offices, it is not out of the ordinary for a doctor to receive a $15 gift card to Starbucks from a grateful patient that is happy with the care they received. Unfortunately, these gifts are best declined as they are cash related and the acceptance of these gifts can be interpreted to contribute to a potential bias from the provider. There are plenty of ways to express gratitude to medical providers that are well received. Great examples are packaged snacks, handwritten letters or stationary.

Despite the ethics and tax laws around gifts, it is important to have your financial information managed and processed so you are aware of potential expenses or transactions that require additional attention. Having a clear picture of overall business performance, can give business owner’s the tools to make informed decisions within their operations. Don’t know where to start on getting your finances in order? Schedule a free consultation today to see how Mikaesbooks can help you!

This blog is for educational purposes only. Mikaesbooks is not a tax advisor or legal professional. Seek an Enrolled Agent, EA or a Certified Public Accountant, CPA, or other tax professional for more information.