Thinking of Providing a Gift to your Household Employee for Thanksgiving?
Autumn table setting with pumpkins. Thanksgiving dinner and autumn decoration.
If so, you are not alone. A recent survey of employers revealed that upwards of 26% of employers will provide some form of Thanksgiving gift this year to their employees, an historically high percentage. But is that gift taxable? In general, under IRS guidelines, if the value and frequency with which the gift or benefit is provided is so small as to make accounting for it unreasonable or impractical, it’s not taxable. This is what the law calls a “de minimis” benefit. Examples of non-taxable “de minimis” employee benefits include occasional snacks, coffee, and doughnuts provided by the employer at breakfast or lunchtime; occasional tickets for entertainment events; and a holiday gift such as a Thanksgiving turkey or pumpkin pie. You can also give your employee a gift certificate to obtain a turkey at a local supermarket without running a-“foul” of the tax collector. But be careful: if the gift has a significant value, say more than $100, the IRS may not consider it a “de minims” benefit. Moreover, for gift certificates to not be taxable, they should only permit an employee to redeem them for food that they can acquire without having also to spend cash. Gift certificates with a specific cash value, or which are redeemable for general merchandise, are not de minimis benefits and are taxable.