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ThayerONeal “Office Holiday Tax Deductions”

posted November 30, 2017

Can I fully deduct the cost of gifts to employees?

You can deduct the cost of turkeys, hams, or other tangible gifts you give to employees as long as the value does not exceed $25 per year per employee. They qualify as business expenses, and the gifts are not taxable to the employees or subject to withholding.

Can you write off gifts on your taxes?

Some gifts, other than charitable contributions, are deductible.  You may give business gifts up to $25 per year recipient to clients, associates, and employees and deduct them on your income tax return.

Are company holiday parties tax deductible?

For tax purposes, you can generally only deduct 50% of business-related meal and entertainment expenses. … Done right, a holiday party can be tax-free to the employees (always appreciated) and taxdeductible to the company. And that makes everybody happy this season.

How much money can you gift tax free 2017?

Totally separate from the lifetime gift exemption amount is the annual gift tax exclusion amount. It’s $14,000 for 2017, stuck at that level since 2013. You can give away $14,000 to as many individuals as you‘d like. A husband and wife can each make $14,000 gifts.

Are gift cards given to employee’s taxable income?

 A small property (noncash) gift given to an employee—such as a Christmas present or tickets to a local sports event—most likely won’t be counted as income for that employee. Instead, it’s usually considered a de minimis fringe benefit, which means its value is so small that accounting for it in their taxes would be unreasonable or impractical. Tax law specifically states that “traditional birthday or holiday gifts of property (not cash) with a low fair market value” will qualify as a nontaxable de minimis fringe benefit.

But that rule does not apply to gift certificates and gift cards given to employees. Since they aren’t cash and tend to be relatively low in fair market value, many assume they qualify as de minimis fringe benefits. Unfortunately, the IRS has not come to the same conclusion. Because gift certificates and gift cards are considered cash equivalents—or easily convertible to cash—they do not meet the requirements to be excluded from the employee’s income. Furthermore, since the value of the gift card or gift certificate can be easily determined, they must be treated as wages, subject to payroll and income taxes.

In other words, if you give your employee a holiday ham, it’s not considered taxable income. If you give your employee a Visa gift card to purchase a holiday ham, it counts as income for the employee, subject to payroll and income taxes!

How can I avoid paying tax on my bonus?

Here are a few worth mulling over:

  1. Set it aside for later. Remember, Uncle Sam truly wants you to have a great retirement.
  2. Hold it off. When it comes to bonuses, the IRS expects you to ante up a flat 28% of the money you receive to federal income tax withholding. …
  3. Pay your taxes. …
  4. Give it away. …
  5. Pay up your expenses.

For more information on ThayerONeal go to www.thayeroneal.com or bcheney@thayeroneal.com

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