Non Cash Gifts – What’s Taxable, What’s Not
Its that time of year when you are the Big Cheese at the office sharing Christmas cheer by giving out gifts to your staff. Be sure you know the tax implications for the gifts you give.
Nontaxable gifts. Fruit baskets, hams, turkeys, wine, flowers and entertainment tickets to a show, sporting or other event (but not season tickets) generally are de minimis (nontaxable) fringes if given infrequently.
Taxable gifts. Cash or gift certificates for any amount is wages subject to FIT, FICA and FUTA–e.g., a gift certificate for a turkey is taxable; a turkey is not. So...buy your staff a turkey rather than a gift certificate for the turkey.
Parties and picnics. The cost 100% deductible to the business and nontaxable to employees and their families–if infrequent and given to promote employee health and goodwill –e.g., holiday or cocktail parties, company picnics. [IRC §132, Rev. Rul. 2004–109 and Rev. Rul. 2004-110]
Information provided in part by AIPB - American Institute of Professional Bookkeepers
My gift is You! And that too is non-taxable...