Holiday Gifts Are Spend Too: Approve Them in Slack Before Year-End

Every year around now, the same Slack thread shows up: "Can I order holiday gifts for our top customers? Thinking ~$100 each." Someone reacts with a thumbs-up, a card gets swiped, and in February finance is trying to work out who got what, whether it was a customer or an employee, and why there's a pile of gift cards sitting in "Office Supplies."

Holiday gifts are small, seasonal, and easy to wave through. That's exactly why they're worth a request type of their own. A few extra fields on the Slack request now save a messy cleanup at year-end close and tax time.

This post is practical process advice, not tax advice. Check specifics with your accountant.

Why gifts are not "just another purchase"

Two rules make gift spend different from buying a laptop or a SaaS seat.

Client and partner gifts have a $25 deduction cap per person. The IRS says you can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year (IRS Publication 463, chapter 3). The rule comes straight from the tax code (26 U.S.C. § 274(b)). A few details matter for approvals:

• A gift sent to a company "for the eventual personal use or benefit" of particular people is treated as an indirect gift to those people. The IRS's own example: three $80 gift baskets for three executives are deductible at $75 total, not $240 (Pub. 463).
• Incidental costs like gift wrapping, packaging, insuring, and mailing generally don't count toward the $25, as long as they don't add substantial value (Pub. 463).
• Items costing $4 or less with your name permanently imprinted, widely distributed (pens, desk sets), aren't counted as gifts for the limit, and neither are signs or display racks used at the recipient's business (Pub. 463).
• Anything that could be either a gift or entertainment is generally treated as entertainment, which is generally not deductible. Packaged food or drinks the customer will use later counts as a gift (Pub. 463). So "two tickets to the game" for a client is a different line item from "a box of cookies."
• You need records of the business purpose, a description, the amount, and the date (IRS FAQ on business gifts). The statute also asks for the business relationship of the person receiving the gift (26 U.S.C. § 274(d)).

Employee gifts follow different rules, and gift cards are the trap. Holiday gifts can be a de minimis fringe benefit, meaning small and occasional enough to leave out of wages. But the IRS is blunt about cash: "Cash or cash equivalent items provided by the employer are never excludable from income," and gift certificates redeemable for general merchandise are taxable (IRS, De minimis fringe benefits). If a benefit is too big to be de minimis, the whole value is taxable, not just the excess, and the IRS notes it has previously ruled that items worth more than $100 couldn't be de minimis even in unusual circumstances (same page). Taxable benefits belong in W-2 wages with withholding (same page).

Meanwhile a team holiday party is a separate case: recreational expenses for employees, such as a holiday party, aren't subject to the 50% meal limit (Pub. 463, chapter 2).

So one innocent "holiday gifts, ~$2,000" request can contain three different tax treatments. If nobody splits them at approval, finance has to reconstruct it later from card statements.

What to capture on a Slack gift request

Treat "Gift" as its own request type in Slack, with a short set of required fields:

1. Recipient type. Customer or partner, employee, or mixed. This one field decides almost everything downstream.
2. Recipient list. Names and companies, not "top 20 accounts." The $25 limit is per person per year, and gifts to a company for specific people count against those people (Pub. 463). A list attached to the request is your record of who received what.
3. Business purpose and relationship. One line per recipient or group: "Customer since 2024, renewal in Q1." That covers the business-purpose and relationship records the IRS expects (IRS FAQ; § 274(d)).
4. What it is. Physical item, packaged food, event tickets, or gift card. Tickets push the request toward entertainment; gift cards for employees push it toward payroll.
5. Cost per recipient, split from shipping and wrapping. Ask for the item cost and the delivery and packaging cost separately, since incidental costs generally sit outside the $25 limit (Pub. 463). A single "$95 each, shipped" number hides that.
6. Payment method and vendor. Card, vendor invoice, or reimbursement, so the bill or receipt lands in the right place.

That's six fields. Most people can answer them in a minute while the approver is still looking at the thread.

How to route it

• Customer gifts at or under budget: the budget owner approves in Slack, as with any other purchase. The approval record carries the recipient list and purpose.
• Employee gifts that are cash or gift cards: add payroll or whoever runs payroll as a required approver, or at least a notified one. Per the IRS, those amounts are wages (IRS), and payroll needs to know before the last pay run of the year, not after.
• Tickets or events for clients: route as entertainment, not gifts, so nobody books them expecting a gift deduction.
• Anything mixed: ask the requester to split it into separate requests. One request, one treatment.

How to book it in QuickBooks or Xero

When the approval carries the fields above, coding is mechanical:

• Separate accounts for client gifts, employee gifts or awards, and entertainment. If everything goes to a single "Gifts" or "Marketing" account, your accountant has to re-split it at year-end.
• Put the recipient list on the transaction. Attach the approved request (or its export) to the bill or expense in QuickBooks or Xero, the same way you'd attach a receipt.
• Book shipping and packaging as their own line. You already captured them separately on the request; keep them separate on the bill.
• Hand employee gift card totals to payroll before the final payroll of the year so they can go through wages.

A quick pre-December checklist

• Add a "Gift" request type in Slack with recipient type, recipient list, purpose, item type, cost per person, and shipping split out.
• Agree on a per-recipient budget for client gifts, and let finance know when a request goes past it, so that's a decision rather than a surprise.
• Decide your stance on employee gift cards (approve and run through payroll, or switch to non-cash gifts) before requests start coming in.
• Create or confirm the three accounts in QuickBooks or Xero now, not during close.

Holiday gifts are a nice gesture. With six fields on the request, they're also a clean one.