The holidays are a time for gratitude, and many employers show appreciation by giving gifts to their staff. Different types of gifts can have different tax consequences. So, whether it’s a gift card, a holiday turkey or a year-end bonus, it’s important to know how the IRS will treat the gift.
“Achievement awards” are deductible by the employer and tax-free to the employee if certain rules are met, including that the gift be of tangible personal property. So are “de minimis” gifts, such as that holiday turkey. But year-end bonuses are taxable. Contact the office if you have questions about the tax implications of employee gifts.