Is giving away massages tax deductable?

[Dude]

I have a fish bowl sitting in the salon where I rent my room and every month I'm giving away some half sessions. I was wondering if I can claim the equivalent in money for the time spent, since basically that is advertising cost.
Also, I have to have a cell phone, it is the only phone number my clients can call, but I also use it for private calls. Can I claim the whole bill, half or do I have to break it down or estimate the perceneforum.xxxe used for business?

Thanks a lot.

 

[swelou]

Is giving away massages tax deductable?

I have a fish bowl sitting in the salon where I rent my room and every month I'm giving away some half sessions. I was wondering if I can claim the equivalent in money for the time spent, since basically that is advertising cost.
Also, I have to have a cell phone, it is the only phone number my clients can call, but I also use it for private calls. Can I claim the whole bill, half or do I have to break it down or estimate the perceneforum.xxxe used for business?

Thanks a lot.

Consult a tax professional.

As a general rule

you would have to estimate the break out of your phone usage between personal and business.

you cannot deduct your time spent on free services. Sending out a mailing is also advertising expense, but you cannot claim the time you spend putting it together. An expense is something you can document with a receipt.

 

[I demand a recount]

If, however, you own a massage space and hire ICs, I would image whatever monies you pay the therapist to perform a redeemed donated GC could be considered an expense. I'm not sure. What are your thoughts on this, R&R?

 

[ALEX!!!!!!!]

Yes, and no. It basically works out to a wash to your bottom line, but you can claim a "sale" then claim a deduction for the discount. It doesn't change the taxes you owe, but it does beef up your gross receivables so your business looks bigger on paper.

The main reason to do such a thing is if you are trying to get credit or a business loan, it shows that you are busy earning money.

 

[Pippin]

If, however, you own a massage space and hire ICs, I would image whatever monies you pay the therapist to perform a redeemed donated GC could be considered an expense. I'm not sure. What are your thoughts on this, R&R?

Correct, but not cost effective.

Paying someone to perform a promotional massage just lowers your company profit (taxable income when translated onto your 1040). If you paid an IC $50 to do the massage, and your tax rate is 20%, then you reduced your taxes by $10. Small comfort when you are out $40.

If you claim the value of the Free Massage - say $100 in the example above - as a charitable contribution (note the distinction between this and advertising expense, but it has to be a legitimate contribution not a random promotion) Then your income is lower, you still have the expense so you spend $50 to your IC to generate a reduction of your taxes of $30 ($20 on the value and $10 on paying the IC).

Tax deductions -- whether they are charitible contributions or increased expenses -- are not inherently good things. They are designed to take the sting out of the taxes you do pay. That is different from a Tax Credit, which reduce your taxes dollar for dollar and are a good thing.

Finally, you should consult a tax professional. Chances are, unless you own/run a multi-therapist practice and are earning more than $70k per year, your Federal Tax burden is so minimal that you derive almost no benefit from charitable contributions or increased levels of business expense.