Employers Warned not to Forget to Include Employee Holiday Gifts on Form W-2

Receiving an office gift during the holidays
often brings squeals of joy.  However,
those squeals of joy often turn to grunts of “oh no” when employees realize
that the value of some gifts is includible on their Form W-2.

Generally, cash and non-cash gifts, bonuses,
and awards are additional W-2 wages subject to payroll and income taxes.  However, if the gift, bonus, or award is a “de
minimis fringe benefit” or an “employee achievement award,” it is tax-free to
the employee.  IRC Section 132; IRC
Section 274(j). 

Determining if a gift, bonus, or award
qualifies as an employee achievement award is relatively simple.  If the amount given is based on either the
employee’s length of service or given as a safety award it generally qualifies
as an employee achievement award.

Determining if a gift, bonus, or award
qualifies as a “de minimis fringe benefit” can be more complicated.  Essentially, the value has to be so little
that accounting for it would be unreasonable or administratively impracticable.
For some employers this can get complicated because the IRS has not provided
any guidance to determine when the facts and circumstances indicate that the
value of the gift is too little.

The IRS has identified the following items
as a “de minimis benefit” if they are given occasionally. 

  1. Group meals
  2. Employee picnics
  3. Theater or sporting event
    tickets
  4. Coffee, doughnuts, or soft
    drinks
  5. Flowers or fruit for special
    circumstances
  6. Local telephone calls
  7. Traditional birthday or holiday
    gifts (not cash) with a low fair market value

Givner & Kaye focuses on sophisticated income tax planning and
compliance, tax litigation and procedure, estate planning, and asset protection
plans for individuals and businesses in Beverly Hills,
Calabasas, West Los Angeles, Hollywood, and
other areas of Los Angeles, Orange,
Ventura, San Bernardino,
Riverside and Santa Barbara Counties.  Call Los Angeles Estate Planning and
Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

Receiving an office gift during the holidays
often brings squeals of joy.  However,
those squeals of joy often turn to grunts of “oh no” when employees realize
that the value of some gifts is includible on their Form W-2.

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Bruce Givner

Licensed since 1976

Member at firm Givner & Kaye A Professional Corporation

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Bruce Givner

Licensed since 1976

Member at firm Givner & Kaye A Professional Corporation

AWARDS

AV Preeminent

RECENT POSTS