As part of our employee recognition program(service, tenure, etc.) we often give gift certificates. Do we need to report the amount of the gift certificate as taxable income for our employee? Is there a dollar amount we should consider, to avoid reporting the amount of the gift certificate as taxable income for our employee? If so, what is that dollar amount?
Thank you,
Christina
1 Answer from Attorneys
Small gifts, like fruit baskets, turkeys, wine, or flowers are generally considered nontaxable.
Gift certificates are considered taxable wages, and are subject to all employment taxes, even for a small amount. In effect, such gifts are taxable income and tax deductible for the business. So the gift of a turkey is not taxable, but a gift certificate for a turkey is taxable.
To give specific advice, it is necessary to review details regarding amount, form of gift, etc.
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