Some Employer-Given Gifts Can Take Away Holiday Cheer
Real estate professionals are no different than anyone else: they like to give appropriate holiday gifts to their employees. It’s important, however, that you give some thought to the types of gifts you give or you might face the wrath of your employees if the gift increases their tax burden.
The reason is simple: Uncle Sam views many of the gifts, perks, and freebies given by employers to their employees not as an expression of appreciation or goodwill, but as a taxable expression of appreciation or good will. Even something as simple as a gift certificate to a restaurant counts as income. Here are some examples of items that could be taxable to your employees – and alternatives that could hold at bay the outstretched hand of the taxman:
- Taxable restaurant gift certificates – alternative could be a tax-free holiday party for all employees
- Taxable cash bonuses – alternative could be gift cards or bonuses paid with check separate from payroll (still taxable but not quite as bad)
- Gift cards, checks, and other cash equivalents are taxable; inexpensive electronics, fruit baskets, and other food items normally are not
Toeing the line of government regulations might seem to be a lot of work, but it will keep your employees happy. The holidays can be stressful enough for your employees. Don’t add to their tax burden and give them a good reason to ring in the New Year with bad sentiments. Your employees will appreciate your efforts.