Santa Claus exists - of course - you see him everywhere during Christmas Season so he is indeed real. But did you know that even he must pay taxes?
The Santa Claus you see in shopping malls and at holiday parties are paid and are taxpayers. And, just like the rest of us, can take advantage of some tax benefits that can lower their tax liability and increase their tax refund.
Santa will get a W-2 that contains his income for that holiday season job he had at the mall. The form 1099, on the other hand, is given Santa if he makes a variety of personal appearances at holiday parties and other related events and if he works for a business that manages his appearances. He might also get a check sometimes. Santa’s work is considered done as a freelancer or contractor if he’s given a 1099 or a check. Some of his supplies can even be tax-deductible.
For the purpose of taxes, businesses expenses that are potentially eligible are seen as ordinary and necessary costs of doing business. If these expenses are not reimbursable by the employer, they will be claimed by employees as miscellaneous itemized deductions for the tax year 2017. They are deductible to the point they are higher than 2 [ercent of adjusted gross income. It’s a different story for business owners and taxpayers who are working as freelancers and contractors. They are not limited on how much of these eligible expenses they can deduct.
In order to become real-life Santa, these taxpayers will have to look like Santa (think the wearing of suit and beard) and know how to “ho ho ho!” (or go through a little bit of training). However, expenses can only become potential tax deductions if they passed with some specific rules. That information will also be able to help non-Santas (other people) who purchase things for their jobs.
To help taxpayers determine if what they purchased for work qualifies as a tax deduction, take a look at the following questions and answers. Santa can deduct the following expenses on his tax return:
To better understand what temporary employment tax deductions and their tax situation are, Santa or any taxpayer can consult a tax professional that can help with filing a correct and complete tax return.