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Is Christmas employee gift giving tax deductible?

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  • Is Christmas employee gift giving tax deductible?

    I have a general taxation question -

    I recently joined a practice which is employed by the hospital. I am on salary position on staff. The older folks at our practice give christmas gifts to the staff every year that includes every one from the janitorial services to the PA/NP and everyone in between. There are 15 MDs in our group and they have decided to give gift cards to the non-MD employees as a group. The total per MD is about $900 based on the size of the staff.

    Since I am new to the group, shelling out $900 for the staff is a lot of money. So my question is, is this contribution tax-deductible? Each staff member will get some $50 gift card as a contribution from all the MDs.

    Please help if I can save something from the Tax Man !!!

  • #2
    I thought it would count but as an employee, you would have to clear the 2% floor for schedule A deductions? I believe there is also a limit on gifts but I'll have to double check

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    • #3




      I have a general taxation question –

      I recently joined a practice which is employed by the hospital. I am on salary position on staff. The older folks at our practice give christmas gifts to the staff every year that includes every one from the janitorial services to the PA/NP and everyone in between. There are 15 MDs in our group and they have decided to give gift cards to the non-MD employees as a group. The total per MD is about $900 based on the size of the staff.

      Since I am new to the group, shelling out $900 for the staff is a lot of money. So my question is, is this contribution tax-deductible? Each staff member will get some $50 gift card as a contribution from all the MDs.

      Please help if I can save something from the Tax Man !!!
      Click to expand...


      I am presuming that you are all pitching into a pool for the gifts and that the deduction will flow through the business to your K1 rather than being l isted as an employee business expense subject to the 2% floor. Therefore, technically, the IRS allows a deduction for only $25/per recipient for gifts. That is a really stingy rule and hasn't changed for at least 20 years. Probably, the CPA preparing the tax return will deduct the full amount of the gifts. If the practice's return were to be selected for audit on that particular issue, any amount beyond $25 per recipient would be disallowed and the disallowance would flow through to the shareholders on your K1s.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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