As we approach year end and many employers give gifts or other bonuses to employees, Rackers & Fernandez LLC, wants to remind our clients of the rules on these items.
The IRS does not require that “De Minimis Fringe Benefits” be taxed to the employee (and social security taxes withheld).
De Minimis Fringe Benefits include:
- Birthday or holiday gifts of property (not cash) with a “low fair market value”
- An occasional party group meal or picnic for employees and their guests or occasional gifts of tickets (such as for sporting events or theater)
Items to keep in mind when giving gifts/ bonuses to employees are as follows:
- Items that are convertible to cash ( gift certificates, debit cards, etc) and cash itself are considered taxable to the employees and subject to employment taxes.
Please keep these rules in mind if you are giving gifts to employees this holiday season.
Feel free to contact one of our team members if you have any questions about this issue.
Happy Holidays !