Question: Are there tax or IRS implications if we give our employees a gift certificate or gift card instead of a cash bonus?
Answer: According to the IRS, cash or “cash equivalents” (such as gift cards) are always taxable. However, you can exclude the value of a de minimis (minor) benefit you provide to an employee. If you offer the employee a different type of recognition reward (such as a dinner out or tickets to an event), it may not be taxable. While the IRS doesn’t specifically put a dollar value on what constitutes “de minimis,” it is defined as “any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impracticable. Cash and cash equivalent fringe benefits (for example, use of gift card, charge card, or credit card), no matter how little, are never excludable as a de minimis benefit, except for occasional meal money or transportation fare.”
For more information, the 2017 IRS Publication 15-B Employer’s Tax Guide to Fringe Benefits offers a chart that shows the tax excludable value of some fringe benefits.
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UST maintains a secure site. This means that information we obtain from you in the process of enrolling is protected and cannot be viewed by others. Information about your agency is provided to our various service providers once you enroll in UST for the purpose of providing you with the best possible service. Your information will never be sold or rented to other entities that are not affiliated with UST. Agencies that are actively enrolled in UST are listed for review by other agencies, UST’s sponsors and potential participants, but no information specific to your agency can be reviewed by anyone not affiliated with UST and not otherwise engaged in providing services to you except as required by law or valid legal process.
Your use of this site and the provision of basic information constitute your consent for UST to use the information supplied.
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This Privacy Policy and the Terms of Use for our site is subject to change.