If you give a holiday gift to an employee in the form of cash or a cash equivalent like a gift card or gift certificate, this is taxable income and should be included in the employee’s W-2, and your business will receive a deduction for this. ![]() What makes employee gifts tax deductible? Let’s look at the types of gifts you may give to employees and discuss whether or not they are tax-deductible for your business. As you know when you meet with your CPA for tax planning each year, nothing is quite as simple as it seems when it comes to your taxes. In simple terms, the IRS defines a gift as anything of value transferred from one person or entity to another without receiving anything of equal or greater value in return. Before spending a ton of cash on your well-deserved employees or throwing a huge holiday bash in the office, it’s important to review the tax rules associated with employee gift-giving. ![]() It’s only natural that when Thanksgiving, Christmas, Hanukkah, or other holidays your employees might celebrate come around you want to show gratitude by presenting those employees with holiday gifts. What Are Tax Deductible Holiday Gifts for Employees?Īs a business owner, you see first-hand how hard your staff works throughout the year. That’s why the certified public accountants at Steward Ingram & Cooper PLLC have compiled all the information you need to know about the tax-deductible status of employee gifts. It is important to know how your holiday gift expenses affect you and your business during tax season. With the holidays quickly approaching you may be considering how to show your employees a sign of appreciation by giving them gifts or throwing them a holiday work party this season.
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