An Opportunity to Appreciate Your Most Important Asset
Use this festive time in the next month to show appreciation to your employees. Often, the first thing that comes to mind is turkeys for Thanksgiving and hams for Christmas. Keep in mind these may not appeal to every employee due to religious beliefs and dietary restrictions. Some ideas for alternate holiday gifts for employees include:
- Gift baskets filled with all the trimmings.
- A spa day during the work week.
- Holiday bonus (however, at HRinDemand, we recommend that you consider tying bonus to performance, contact us for assistance creating an effective pay for performance plan).
- Tickets to movies, holiday show performances, local stage productions, etc.
- Paid time off that doesn’t dip into vacation banks. The credit for this idea goes to a favorite client of HRinDemand who did this last year; his employees loved it and appreciated it more than money! Everyone needs more time during the busy holiday season.
- Gift cards to buy groceries (beware that there are tax implications* in providing gift cards for both the employer and employee – check with your tax adviser to ensure no one is exposed to unknown tax liability, see detail below).
- Technology gifts (reading tablets, handheld devices, other nifty gadgets).
Poll your workforce and find out what they would value…you might be surprised to find what matters most to your employees.
Possible Tax Implications of Gift Cards*
Is the gift a cash equivalent (i.e. does it have a clear, monetary face value or does it give the employee broad choice in selecting the final item received)?
- If YES; then the company and the employee must report it to the IRS and withhold taxes.
- If NO; then the gift may be tax exempt.
Is the fair market value of the item de minimus (i.e., so small that accounting for it is unreasonable or administratively impracticable) after taking into account all the facts and circumstances, including frequency?
If YES; then it is likely a tax exempt fringe benefit.
- If YES; then it is likely a tax exempt fringe benefit.
- If NO; then the company and employee will have to report it to the IRS and withhold taxes.
Note: The IRS has ruled previously in a particular case that items with a value exceeding $100 could not be considered de minimis, even under unusual circumstances. It is best to consult your tax adviser as HRinDemand is not qualified to offer tax advice.