Deductible tips to workmen?

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Subject Author Date Deductible tips to workmen? AES 11-29-2008  Re: Deductible tips to workmen? Phil Marti 11-29-2008  Re: Deductible tips to workmen? Stuart A. Bronstein 11-29-2008  Re: Deductible tips to workmen? Phil Marti 11-29-2008  Re: Deductible tips to workmen? Alan 11-29-2008
Posted by AES on November 29, 2008, 4:41 pm Please log in for more thread options About half our personal residence (on a college campus) has been converted into long-term separate-entrance studio rentals for students. So, we deduct a pro rata share of general maintenance costs (gardening, driveway maintenance, outside painting, etc, all work done by licensed private firms) against these rents along with appropriate depreciation, pro rata utility costs, etc (and our tax preparer concurs in this). SInce we've developed long-term relationships with some of the maintenance workers involved, we also generally give them a cash tip at Christmas time. OK to deduct a pro rata share of this as part of the rental maintenance costs? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Phil Marti on November 29, 2008, 5:05 pm Please log in for more thread options "AES" wrote: > SInce we've developed long-term relationships with some of the > maintenance workers involved, we also generally give them a cash tip at > Christmas time. OK to deduct a pro rata share of this as part of the > rental maintenance costs? Since you're paying a business for the work, the straightforward way to give special recognition to the workers would be through their employer. Of course this would be part of your deductible expense for the rental. It would also be taxable income to the workers reflected on their W-2's. If you don't want to go that route and just slip them some cash on the side, I'd be hesitant to deduct it since it sounds more like a gift to me. -- Phil Marti Clarksburg, MD -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Stuart A. Bronstein on November 29, 2008, 5:25 pm Please log in for more thread options > "AES" wrote: > >> SInce we've developed long-term relationships with some of the >> maintenance workers involved, we also generally give them a cash >> tip at Christmas time. OK to deduct a pro rata share of this as >> part of the rental maintenance costs? > > Since you're paying a business for the work, the straightforward > way to give special recognition to the workers would be through > their employer. Of course this would be part of your deductible > expense for the rental. It would also be taxable income to the > workers reflected on their W-2's. > > If you don't want to go that route and just slip them some cash on > the side, I'd be hesitant to deduct it since it sounds more like a > gift to me. Can't you make and deduct business-related gifts worth up to $25? Stu -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Phil Marti on November 29, 2008, 5:51 pm Please log in for more thread options "Stuart A. Bronstein" wrote: > Can't you make and deduct business-related gifts worth up to $25? The issue to me was whether it's taxable to the workers, somewhat weighing "well, if it's income to the recipient it's deductible by the payer." An employer can give de minimus NON-CASH gifts to employees without inclucing the value in the employees' income (while deducting the cost). Cash is taxable as wages. Of course, OP's situation isn't employer/employee. I like Alan's suggestion that holiday tips to the service vendors' employees would be an ordinary and necessary business expense. -- Phil Marti Clarksburg, MD -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on November 29, 2008, 5:36 pm Please log in for more thread options AES wrote: > About half our personal residence (on a college campus) has been > converted into long-term separate-entrance studio rentals for students. > So, we deduct a pro rata share of general maintenance costs (gardening, > driveway maintenance, outside painting, etc, all work done by licensed > private firms) against these rents along with appropriate depreciation, > pro rata utility costs, etc (and our tax preparer concurs in this). > > SInce we've developed long-term relationships with some of the > maintenance workers involved, we also generally give them a cash tip at > Christmas time. OK to deduct a pro rata share of this as part of the > rental maintenance costs? > In order to deduct a business expense you need to show that it is ordinary and necessary and the amount is reasonable. If it is common practice in that geographic area for property owners to tip their service and maintenance workers, then I would say it is probably an ordinary expense. And if the tip promotes a healthy relationship with the vendor and is helpful to the business, I would say it is also necessary. And... as long as the amount is reasonable, I would conclude it was deductible. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted What happens to TIPS in deflation? January 30, 2009, 1:36 pm Loss in value of TIPS February 17, 2010, 10:05 am NY to NJ with house purchase - tips? June 16, 2009, 5:16 pm How to deal with tips (Treasury Inflation Protected Securities) December 23, 2008, 1:48 am Is this deductible November 30, 2007, 1:51 pm Assets Deductible? February 12, 2007, 12:04 am points deductible? 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