Timely as ever, AIPB (The American Institute of Professional Bookkeepers) sent me their most recent newsletter with the following tips I thought I’d share with you.
Nontaxable gifts. Fruit baskets, hams, turkeys, wine, flowers and occasional entertainment tickets, such as to a show or sports event, generally are nontaxable as de minimis fringe benefits.
Taxable gifts. Gift certificates (“cash in kind”) are wages subject to FIT, FITW, FICA, and FUTA—even for a de minimis item. For example, a gift certificate for a turkey is taxable even though the gift of a turkey is not. Cash gifts of any amount are wages subject to all taxes and withholding. [26 CFR 1.132-6(e); TAM 200437030]
Parties and picnics. The cost of occasional parties is nontaxable to employees and their families as a de minimis fringe—if they are infrequent and for the purpose of promoting employee health, goodwill, contentment, or efficiency. Examples: occasional holiday celebrations, cocktail parties and company picnics. Such parties are fully deductible to the business (they are not subject to the 50% limit on business meals). [IRC §132]
The bottom line??? Eat, drink and be merry with your employees this season…it’s tax deductible! You might want to reconsider the gift cards and gift certificates though, they are wages subject to taxes. Don’t have the time to go out and purchase tokens of appreciation for your employees? Yet another task a Virtual Assistant can handle for you! Sorry, couldn’t help myself…had to slide that in!
Speak Your Mind