Do You Have to Report Gift Cards As Income Through the IRS?

Depending on the circumstance, taxes must be paid on a gift card.

Gift cards have become a popular option, both as personal gifts and for companies to give their employees. Income taxes must be paid on a gift card's amount in certain situations, although not all gift cards are taxable.

Types

Gift cards received as personal gifts between two individuals are not required to be reported to the Internal Revenue Service, and taxes do not need to be paid on such gifts. However, gift cards from an employer are considered taxable income and must be reported to the IRS.

Considerations

Gift cards given to employees to be used for specific personal property items may be excluded from reporting requirements, as may gift cards used to compensate an employee for meal and transportation benefits when working overtime, according to the IRS website.

Warning

People who give gift cards with high monetary value often are responsible for paying a gift tax on their donations. The IRS website suggests that people who might need to pay a gift tax talk to a tax professional.

References

• Internal Revenue Service: Frequently Asked Questions on Gift Taxes
• Internal Revenue Service: De Minimis Fringe Benefits