topic Re: Tax write off for referral bonus in Get your taxes done using TurboTax

Tax write off for referral bonus

gcetgin1 — Sun, 20 Dec 2020 19:38:34 GMT

Hello,

I have a coaching and consulting company as a solo entrepreneur. I am considering giving referral bonus to friends and family once they refer me a client (up to 10% of client fees I'd receive). I am also considering giving it as a discount for my current clients for the future services if they refer someone else as well. Would this be an expense that I can write off?

I see that gift giving write off is limited $25/person, and I am hoping that offering referral bonuses can fall under promotional expenses. Is that a correct assumption?

Thank you very much in advance!

Re: Tax write off for referral bonus

Bsch4477 — Sun, 20 Dec 2020 20:15:33 GMT

You can’t deduct the discount on services. You do get a tax “benefit” by having less income taxed.

Re: Tax write off for referral bonus

VolvoGirl — Sun, 20 Dec 2020 19:57:13 GMT

Unless you entered the full amount before the discount as income, then you can deduct the discount under Advertising or Misc Expense.

Re: Tax write off for referral bonus

gcetgin1 — Sun, 20 Dec 2020 20:04:01 GMT

If I understand it correctly, for friends and family, I can offer cash and that would be considered as the advertisement expense.

If I offered it to my current client as a discount for the future services, obviously there is nothing to deduct, I would just charge them fee minus their referral bonus.

Did I get it right?

Re: Tax write off for referral bonus

VolvoGirl — Sun, 20 Dec 2020 20:12:10 GMT

@Bsch4477 Your answer was right. You should put it back. I was just adding some more.