Are free services or discounts given to clients tax deductible?

[fayez12311]

I offer salon services if i were to offer to my clients 

Buy 9 services and 10th free (like the coffee and restaurants offer cards to their customers )

Will the 10th service be tax deductible 

Also the discounts given to clients are they Tax deductible.

TIA

[MichaelDC]

No, free services are not deductible. When filing as Self-Employed, you pay taxes based on your sales minus your expenses.

Think of it this way, if you were paid for the service, you would pay tax on that income. Since you received no income for that service, you don't have to pay taxes on it.

Or another way...you could charge and receive money (and include it in your sales), but turn around and give the money back to the client as a "marketing expense". It's the same thing in the end -- a wash both ways.

[fayez12311]

So you can say this would a marketing expense or no?

[MichaelDC]

No, according to the IRS.

[t2lark21]

So would it be better to charge them, then turn around and donate it to a business or organization? Can I also donation my income to my organization?

[VolvoGirl]

No.  You can't deduct income you never received.  You will just have less income to be taxed on.  You take the loss by still deducting all your expenses but not your time or labor.  Unless you entered the full amount before the discount as income, then you can deduct the discount under Advertising or Misc Expense.

[Connerll]

Question: If a business does not collect sales tax from the customer, is that tax deductable as a business expense?

Thank you.