Tax Implications Regarding Employee Gifts Vs. Compensation
Employees often receive additional benefits and gifts from employers that never show up on W-2 forms. Some of these common gifts need not be taxed at all, providing they fall within IRS guidelines.
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Awards
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A tangible award received in recognition of length of service or for safety achievement will be excluded from taxable compensation provided it is not cash, gift certificates or cash equivalents, such as additional vacation time, stocks, bonds, meals or lodging. To be excluded, it must also not exceed the annual limitation imposed on employers.
De Minimis
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Non-cash benefits received from an employer are excluded from taxable compensation if the value of the benefit is so small and "de minimis" that it makes accounting for it unreasonable. Therefore, if you receive a small holiday gift or make some personal copies in the office, your tax liability will not increase.
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No-Cost
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You will not be required to pay tax on the value of services you receive from your employer if it is the same type of service provided to customers and does not incur additional costs. A common example is an airline employee allowed free travel only when space is available.
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