Gifts, in general, are not tax-deductible. Gifts to individuals are not tax-deductible. Tax-deductible donations only apply to contributions you make to qualified organizations. If you make a single donation during the year that exceeds the annual exclusion amount, the tax law gives you a unified credit to offset any gift taxes you may owe.
While donations to employees have their own limitations and can be treated as taxable compensation, the employer can generally deduct the full cost of donations made to employees. People whose assets exceed the current exemption level should also consider making donations and using these strategies while they are still available to reduce inheritance and gift taxes. Depending on the amount of money you're giving to your adult child, you may have to pay a federal gift tax. In some situations related to donating tickets for sporting or other events, the taxpayer can choose between requesting the deduction as a gift or as entertainment.
However, because of the generous exclusions and deductions available, the average taxpayer never files a gift tax return or pay gift tax. Medical donations must also be made directly to the health care provider to qualify for the unlimited exclusion of gift tax. It doesn't apply if you give a gift to an entire company, unless the gift is intended for a particular person or group of people within the company. A Crummey power of attorney allows a trust beneficiary to withdraw a gift from a trust within a specified period after the gift has been made.
Gift cards and gift certificates are considered taxable income for employees because they can basically be used as cash. A gift to a member of a customer's family is considered a gift to the customer, unless you have a legitimate non-commercial connection with the family member. Whether in cash, gift cards, or as a token of appreciation, gifts have tax implications that small business owners should consider. Any gift you make during your lifetime that exceeds the annual exclusion and does not qualify as a tax-free medical and educational gift will be deducted from your lifetime exemption.
