Gift Certificates: Are they taxable to your employees?


Today I received an email from a client. The holiday seasons are around the corner and she wants to know if she buys employees gift cards or gift certificates, does she need to report those as income to her employees? I have decided to record a short YouTube video on her question because I have been getting similar questions for the 3rd time this week.


Cash or cash equivalent items provided by the employer are never excludable from income. An exception applies for occasional meal money or transportation fare to allow an employee to work beyond normal hours. Gift certificates that are redeemable for general merchandise or have a cash equivalent value are not de minimis benefits and are taxable.


A certificate that allows an employee to receive a specific item of personal property that is minimal in value, provided infrequently, and is administratively impractical to account for, may be excludable as a de minimis benefit (something trivial, something small like birthday cakes, perhaps doughnuts for breakfast), depending on facts and circumstances. To provide further explanations, please watch the video that I have developed for you. Enjoy!


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