Things Bought with Gift Cards Deductible?

[MarinaVanessa]

Okay I never bought anything for my daycare with a gift card so this question never came up so here's the deal. I just recently had my babyshower and on top of getting everything that I would need for the new baby, I got TONS of giftcards.

So my question is this, since I have so much in gift cards and I buy things for the daycare the amount is still tax deductible right?

I mean the receipt will show that I paid with a gift card so I want to make sure that if I purchase something for the daycare I can still claim it. I need some supplies for crafts and curriculum that I need to buy and it would be great if I could use the giftcards for this but I don't want to do that unless I can still claim it. Any thoughts before I call my tax consultant for the 50th time this month?

[Michael]

Maybe Tom Copeland will chime in on this but I believe you will be taxed on the amount of those gift cards. I Believe the IRS expects you to declare them as gifts.

[MarinaVanessa]

Maybe Tom Copeland will chime in on this but I believe you will be taxed on the amount of those gift cards. I Believe the IRS expects you to declare them as gifts.

Good point. It's about $250 total in gifts cards that I don't think that I'll need that I received from the babyshower but I don't think I'll be needing them for anything and I don't want them to go to waste. I also don't want a whole big mess or a hassle but I guess I could always go through the process of getting them cashed (which is also not a fun process).

[Lucy]

You can sell them at a little bit of a loss on ebay. Put a reserve so you don't lose more than you're willing to.

I didn't know you could cash them in at the store??? Is that what you meant? Explain how you do that??

[legomom922]

I'm thinking being that someone else already "paid" for them, that you would not be able to claim them as a deduction, because you are not "paying" for the item. I'm sure you can think of something to buy the baby with them!

[mac60]

Wow, I would be buying some new household stuff, new dishes, new bathtowels, I could spend that $250 pretty fast. If it was a gift for the baby/you, I would be upset if it was spent on daycare if I gave it to you.

[SandeeAR]

Why would it be a problem? Why would the IRS assume they are gifts? Who is to say that you didn't buy them yourself and then turn around later and use them? Many people buy the cards (Walmart as and example) and then use them to purchase their groceries and gas for the month.

[MarinaVanessa]

Wow, I would be buying some new household stuff, new dishes, new bathtowels, I could spend that $250 pretty fast. If it was a gift for the baby/you, I would be upset if it was spent on daycare if I gave it to you.

I understand what you mean but I really don't need anything and the baby already has a bank account that my dad started which we deposited some checks that were given to us also. The only thing that we would need to buy from a Target store would be supplies like toilet paper, paper towels, food etc. but it feels a shame to spend money on stuff like that that we get for cheaper at a Costco. I wasn't planning on spending the whole amount, just about $50 or so for our fall activities.

[MarinaVanessa]

I didn't know you could cash them in at the store??? Is that what you meant? Explain how you do that??

I don'tknow if it's different in each state but in CA if a customer wants to "cash" in a gift card they have they can. It's a long process that involves going in to the store with the gift cards, calling corporate office and requesting this and then waiting for a check in the mail. It's a huge hassle and time consuming, I used to do these all of the time when I worked at a home improvement store. Oh well, I guess I'll just keep them and see if I need something.

[misol]

Wow, I would be buying some new household stuff, new dishes, new bathtowels, I could spend that $250 pretty fast. If it was a gift for the baby/you, I would be upset if it was spent on daycare if I gave it to you.

I understand what you mean but I really don't need anything and the baby already has a bank account that my dad started which we deposited some checks that were given to us also. The only thing that we would need to buy from a Target store would be supplies like toilet paper, paper towels, food etc. but it feels a shame to spend money on stuff like that that we get for cheaper at a Costco. I wasn't planning on spending the whole amount, just about $50 or so for our fall activities.

Not to get off the original topic of taxes, but I think that the recipient of a gift card is entitled to use it however they choose. If they want to use it to buy items for their daycare, or household , or other family members, etc. then they should do so. Either way, the baby still benefits (indirectly) because that has freed up some money somewhere. If the gift-giver ever asks what you bought with the gift card that they gave you (rude in my opinion) just tell them that you used it toward the purchase of _______ (insert baby item here). Unless you receive something handmade or custom made, I think a recipient should feel free to either use, return, or exchange a gift item for something that is more practical or suitable to their taste or situation. Just my 2 cents.

[legomom922]

If the gift-giver ever asks what you bought with the gift card that they gave you (rude in my opinion) just tell them that you used it toward the purchase of _______ (insert baby item here).

If you use the giftcard on something else and someone asks what did you end up getting, and you respiond with the above quote, that is lying..

The whole purpose of giving gift cards in the first place, is to pick out something that does meet your tastes, the right size, color, and avoids getting 2 of one item or something you already have. To take it back to the store, or cash it in, or use it on some thing else other than what it was intended for, I feel is rude. It's a baby shower gift for the baby, and should not be used on daycare supplies, or paper towels.

I'm sure the baby does nothave everything it needs and is going to need. Gift cards do notusually expire. And what is wrong with target anyway? They have plenty of wonderful baby things, so I'm sure you can find something at some point.

If I gave a gift card for a baby shower, and found out it was cashed in or used for some other purpose, I would feel like my gift was not valued,or was important, or appreciated. How would you feel? JMO....

[MarinaVanessa]

Not to get off the original topic of taxes, but I think that the recipient of a gift card is entitled to use it however they choose. If they want to use it to buy items for their daycare, or household , or other family members, etc. then they should do so. Either way, the baby still benefits (indirectly) because that has freed up some money somewhere. If the gift-giver ever asks what you bought with the gift card that they gave you (rude in my opinion) just tell them that you used it toward the purchase of _______ (insert baby item here). Unless you receive something handmade or custom made, I think a recipient should feel free to either use, return, or exchange a gift item for something that is more practical or suitable to their taste or situation. Just my 2 cents.

Thanks Misol, and I know that people feel differently. It's just a shame because even if I bought household products like paper towels, cleaning supplies and toilet paper I don't always buy them seperate for the DC KWIM? So if I bought things like this and the DC kids used them I wouldn't be getting any kind of reimbursement right?

I really don't need anything else and I'm not going to go out and buy new curtains, dishes etc if I don't need them. I'm very frugal and buying something that I don't need seems so wasteful since buying something for the home would mean getting rid of the item being replaced which is perfectly good.

The gift card thing is only going to get harder since I have doubles and triples of items that need to be returned and most don't have gift receipts so guess what? The credit for those items are going on to more gift cards . I literally got everything on my registries and some (it was a very large babyshower).

[Crystal]

Oh good lord, WHY does it matter????? Why does EVERYTHING that gets posted on this forum turn into some sort of debate/argument and go off topic??????

[Michael]

Why would it be a problem? Why would the IRS assume they are gifts? Who is to say that you didn't buy them yourself and then turn around later and use them? Many people buy the cards (Walmart as and example) and then use them to purchase their groceries and gas for the month.

Welcome to the forum SandeeAR.

I didn't mean "gift" literally. It's either a loan or a gift and if the money was gifted then it needs to be declared. I know what you are all thinking but I'm not going to say it.

[MyAngels]

Okay, I have the seventh edition of Tom Copeland's book and I looked up every reference to gifts. In the section "Examples of Deductible Children's Supplies" he lists "presents bought for your own children that are used by the children in your care." So if you get creative with your logic, you could say that the gift cards were "presents bought for your own (unborn) child" and so therefore if you got something for your daycare with them it could be deductible. I'm hoping Mr. Copeland will chime in with the real answer, since I'm suspecting that my reasoning might amount to "fuzzy math"