Tax write off for referral bonus

[gcetgin1]

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!

[Bsch4477]

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

[VolvoGirl · Accepted solution]

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

[gcetgin1]

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? 

[VolvoGirl]

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