The feeling of picking out a gift for someone you care about and love and the anticipation of them opening your gift and being happy is great. If you own a business, you might want to buy presents for your loyal clients, customers, and employees. After all, giving your employees tokens of love will motivate them to work even harder for you. 

However, you should remember that only certain types of gifts are tax deductible. Make sure you follow through with some rules to ensure that you do not have to pay a fortune in taxes. The best way to make tax-deductible gifts is by working with an expert in financial support in Troy, MI. Many Americans get away without paying gift taxes because they follow the allowed limit. 

Gifts that do not require you to pay heavy taxes or any taxes at all 

  • Employee gifts. 

If you are considering giving your employees gifts of nominal value, such as ham, turkey, or some other thing, you probably do not have to worry about taxes. This is because the value of such gifts is so small that accounting for them is impractical. However, if you decide to give your employees gift cards, cash, or a cash equivalent, those things are taxable. Regardless of the amount and the number of times it is given, you must pay taxes. 

  • Stay within the gift tax limit. 

The IRS has set a specific gift tax limit, and the best way to avoid paying taxes altogether is to stay within the limit. The limit increases every year according to the rates of inflation. For example, in 2020, the limit was $15,000 per recipient. Make sure you check the limits of the current year when you make the gifts or consult with an advisor in Troy, MI, first. 

  • Spread the gift out between years. 

It may happen that the gift you wish to give to your loved one does not fit within the stated limit and is significantly more expensive. If you are tempted to make a large holiday gift, you may consider splitting it into two or more parts. For example, if you wish to give a check of $30,000 as a holiday bonus to your best employee, you may split it into two checks of $15,000 each. You may give the first check during the holidays. Then, you can wait till the New Year’s to give them the second check.