Here’s my Halloween confession: we didn’t give out candy this year. We were out with two of the kiddos, and the third was at a party. It was very last minute, which means that since we bought candy, we still have candy. And let’s not forget the booty from trick or treat. It’s a challenge to figure out what to do with all of the sweets. This dilemma inspired a post a few years back. It’s back again, with updates, including those under the Tax Cuts and Jobs Act (TCJA). Here are 13 uses for leftover Halloween candy—complete with the tax consequences, of course:
1. Give the really good stuff to your favorite tax pro just because.
Non-tax consequences: Everybody loves a gift, including tax geeks. Just be sure to pony up Reese’s peanut butter cups and Milky Way bars—don’t try to sneak in your butterscotch stragglers.
Tax consequences: None. If you’re handing over the candy out of the kindness of your heart (or with “detached and disinterested generosity”) and not expecting anything in return, it’s a gift: gifts are not taxable for income tax purposes. And unless you make a habit of giving your tax pro gifts worth more than the annual gift tax exclusion ($15,000 for 2019) – which I am in no way discouraging – you’re fine when it comes to gift tax, too.
2. Pay your tax professional in chocolate.
Non-tax consequences: Depending on costs, this could be a lot of candy. If your tax pro has a sweet tooth, he or she might appreciate some treats, otherwise, they’ll probably insist on payment in the way of cash, check, credit card or bitcoin.
Tax consequences: It used to be the case that fees for tax advice or tax preparation – even if made in candy—could be deductible as a miscellaneous deduction subject to the 2% floor. That’s no longer the rule under tax reform. The deductions for tax-preparation expenses and other miscellaneous deductions that exceed 2% of your adjusted gross income (AGI) have been eliminated through 2025.
3. Pay your plumber or electrician in Snickers bars.
Non-tax consequences: See #2 above.
Tax consequences: None. The costs of most personal services are not deductible for individual taxpayers.
4. Take a bowl (or two) of candy to hand out to your colleagues.
Non-tax consequences: Your colleagues will thank you for making them happy. Also fat. But mostly happy.
Tax consequences: Giving candy to your colleagues isn’t deductible. Even if they could be couched as ordinary and necessary in your line of work (and who doesn’t think that M&Ms are both ordinary and necessary?) unreimbursed employee expenses are no longer deductible. As noted above, deductions for miscellaneous expenses that exceed 2% of your AGI have been eliminated through 2025.
(You can find more on the elimination of the deduction, including what it means for home offices, here.)
5. Keep a filled candy bowl at the office for your employees.
Non-tax consequences: Your employees will think you’re awesome, assuming that you give them the good stuff. Leave out a bowl of unrecognizable nougats, and you’ll have a whole group of folks posting nasty comments to Glassdoor.com before you can say butter brickle.
Tax consequences: None. There’s no out-of-pocket cost to the employer for candy that was gathered by trick or treaters, though candy purchased at a store to feed employees would be a business expense. Occasional snacks offered to employees at their workplace are de minimis and are not includable for tax purposes: the Internal Revenue Service (IRS) considers these items “so small as to make accounting for it unreasonable or impractical.” In fact, the Latin phrase de minimis translates roughly to “of little importance” – which means that the IRS clearly doesn’t know how I feel about Junior Mints. But if you were touting hand-rolled truffles a la Google, it could be considered a taxable benefit. Stick to what’s in the trick or treat bags.
(For more on IRS guidance regarding meals and entertainment, click here.)
6. Exchange your Whoppers for other stuff.
Non-tax consequences: If you use a program like Halloween Candy Buy Back, participating businesses will “buy” back your candy in exchange for cash, coupons, and other creative exchanges; businesses may then work with groups to send candy to our soldiers, children’s hospitals, homeless shelters or other deserving folks. That should give you a reason to smile.
Tax consequences: Property held for personal use is considered a capital asset, and you have to report any gain from a sale or exchange as a capital gain. Assuming that your candy is exchanged for a similar item, there should be no gain and no tax consequences. But what if you lose out by trading a stash of Reese’s cups for a gift certificate to a restaurant that you’ll never patronize? You can’t deduct losses from the sale of personal property (more on losses here). And don’t get fooled into thinking you can take a charitable donation: you can only claim a charitable deduction for gifts made to a qualifying organization to the extent that you don’t receive something in return (more on quid pro quo here).
7. Donate your candy to charity.
Non-tax consequences: Warm fuzzies. You did a good thing.
Tax consequences: Assuming that you contribute to a qualified charitable organization (check with IRS using the new search tool if you’re not sure), you can deduct the value of the goods as an itemized deduction. Document your gift and get a receipt. There’s one more caveat: In addition to making sure that the organization actually wants your extra candy, if you’re donating property that’s not related to the charity’s exempt purpose, your donation may be limited. In other words, if you’re giving candy to an after-school program, you can be reasonably sure that the program will use the candy to accomplish its charitable purpose. But if you donate that same candy to an art museum, not so much. So, use common sense—and a little courtesy (ask first).
8. Use candy as prizes for bingo and card games.
Non-tax consequences: Kids, including big ones, love bingo. We play at our house because it’s fun, it’s easy, and notwithstanding some tricky advice from the seniors in my hometown, it doesn’t require much skill.
Tax consequences: Our family bingo games don’t have tax consequences because we play for peanuts—well, literally for peanut M&Ms, but you get the point. In general, bingo winnings are taxable to the winner as income on line 21 of your federal form 1040: It does not matter whether the winnings are in cash or property (though clearly if you eat the winnings, they’re pretty hard to trace, not that I’m suggesting you evade taxation by this method). And in case you’re wondering if your unorthodox means of play really qualifies as bingo, there is a tax statute for that: 26 C.F.R. § 1.513-5 in the Treasury Regulations.
9. Use candy for tips.
Non-tax consequences: I’m not suggesting that you not give the paperboy a cash tip. But why not hand over some yummy candy as well? It can’t be a bad thing to be known as the house on the block that gives out the best tips ever. But that means you have to give out the good stuff (giving out Necco wafers isn’t going to win you any kudos).
Tax consequences: It depends on who you’re paying. You can’t deduct tips to the paperboy or the pizza delivery girl. However, to the extent that you’re tipping the babysitter or other employees, tips are taxable to them (and thus possibly deductible to you) – but see #10.
10. Make gifts for the babysitter, maid, etc.
Non-tax consequences: Who doesn’t like getting a nice gift now and again? With a little ingenuity, you can fill a cute gift bag filled with candy. Voilà! Minimal cost and effort to let folks know they’re appreciated.
Tax consequences: No matter what you want to call it (a thank you, a bonus, a perk), a gift made to an employee is considered compensation. There’s an exception for small noncash gifts considered de minimis: Those gifts are not taxable. So, a few Hershey bars in a gift bag would be de minimis and non-taxable—a tower of Godiva truffles, likely taxable, though clearly still delicious.
11. Recycle your stash of candy at Christmas.
Non-tax consequences: If you put leftover candy in the freezer, you can recycle it for later. Money saved. Just be sure to sort out the candy with ghosts and pumpkins; otherwise, you’ll have to explain why Santa and the elves are handing out Halloween candy. (Note to new parents: Trying to make up a story about the rarely seen “Christmas bat” almost never works.)
Tax consequences: None. Even if you had paid for it, you can’t claim tax deductions for personal expenses like food or candy.
12. Conduct science experiments.
Non-tax consequences: Candy is pretty awesome, and science is pretty awesome, so why not combine the two? There are all kinds of experiments on candy to keep your budding scientists interested, from melting Starbucks to floating Skittles (you’ll find details on those and more at Candyexperiments.com).
Tax consequences: There’s no allowable tax deduction for tutorials and extras to keep your kids at the top of the class since they’re considered a personal expense (exceptions exist). If you’re a teacher, however, the results are different. Despite threats that the deduction would be eliminated as part of tax reform, teachers may still deduct up to $250 if they use out-of-pocket cash to buy classroom supplies (depending, candy could qualify as “supplementary materials that you use in the classroom”). It’s an above-the-line deduction, which means you don’t need to itemize.
13. Eat it.
Non-tax consequences: Halloween candy is delicious. You might, however, have to explain to your son why you ate his Butterfinger without asking (pro tip: there is no suitable answer). If you decide to sneak an extra treat, remember that there could also be potential long-term effects like cavities and an extra pound or two.
Tax consequences: No immediate consequences. Dealing with some long-term consequences of eating candy, however, might be deductible. While you can’t deduct the cost of going to the gym or joining a weight loss program to get rid of those extra pounds, dental and medical expenses are still deductible. You can deduct out-of-pocket expenses paid for medical care that exceed 10% of your AGI. That means that you can deduct dental expenses if you end up with a mouth full of Skittle induced cavities – but even I’ll admit that’s one heck of a way to squeeze out a deduction.
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