How to Treat Gift Cards

A provider at DayCare.com asks how she should treat receiving gifts cards at her baby shower. When she buys items for her business using the gift card, can she deduct the expense?

If you get a gift card from a friend (that is, someone who is giving you a gift as a friend, not because of a business relationship) then the gift card is not income. If the baby shower was a gathering of "friends", not a gathering of day care parents, then this is not income.

If you get a gift card from a day care parent because they are wishing you Merry Christmas or happy birthday, this should not be reported as income. This is a gift. If the parent is giving you a gift card as a reward for your work, this is income. So, if the parent gives you a gift card at the end of the year as a thank you for your work, it's income.

No matter who you get the gift card from, if you spend the gift card on something that is used in your business you can deduct it under the normal rules of business deductions.

Tom Copeland - www.tomcopelandblog.com

Image credit: https://thebluediamondgallery.com/hand-held-card/g/gift-cards.html

For more information, see my book Family Child Care Record Keeping Guide.