As we are rapidly going through the holiday season, companies of all sizes have several options for how they would like to thank their employees for their hard work throughout the year. Company-wide parties are a popular thing to do, as it is a great opportunity to celebrate the holidays and also a great way for employees to get to know each other better outside of work. Another way is through giving company-wide gifts, awards and bonuses. The way all of these are treated from a tax standpoint can vary. Obviously, the tax implications are not the only thing to consider when making these holiday decisions, but they should be given some consideration. Below is a brief summary of how each scenario is treated:
|Company Holiday Parties||Generally speaking, holiday parties are 100% deductible. The Tax Cuts and Jobs Act eliminated the deductibility of certain entertainment expenses, however holiday parties was not one of them.|
|Employee Gifts||You may deduct employee gifts as long as the average value of the gifts does not exceed $25 for each employee|
|Employee Awards||For employee milestones and achievements, up to $400 of tangible personal property awarded can be deducted per employee|
|Employee Bonuses||Employee Bonuses are treated as an additional part of payroll, so the amounts paid and associated payroll taxes are 100% deductible|
For more detailed information on this topic, please reach our to Tony Mueller, CPA at email@example.com or 314-576-1350.