Solved: Tax write off for referral bonus
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New Member

Tax write off for referral bonus

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!

1 Best answer

Accepted Solutions
Level 15

Tax write off for referral bonus

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

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4 Replies
Level 14

Tax write off for referral bonus

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

Level 15

Tax write off for referral bonus

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

View solution in original post

New Member

Tax write off for referral bonus

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? 

 

 

 

Level 15

Tax write off for referral bonus

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

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