Greenberg & Company, LLC, CPAs

 

500 Morris Avenue, Springfield, NJ 07081-1224

Phone: 973-467-3838

Fax:     973-467-3184

March 2019

March 2019 Client Profile

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Marilyn owns a business with 20 employees. For the past five years, she has awarded cash gifts to her employees of the month, but she is concerned that the new tax law will adversely affect her and her rewarded employees. What should she do?


Rewarding employees in this way has obviously worked for Marilyn and her business and she may decide to continue this practice, but her business can’t deduct the cost anymore. In the past, cash, gift cards and other non-tangible personal property used as employee achievement awards were deductible to the business and excluded from employees’ taxable income.


Certain tangible gifts are still allowed but, according to the IRS, they don’t include cash, cash equivalents, gift cards, gift coupons, certain gift certificates, tickets to theater or sporting events, vacations, meals, lodging, stocks, bonds, securities and similar items.


Other tangible gifts are both tax-deductible to the business and excluded from employees’ taxable income if awarded for length of service or safety achievements. They might include a plaque, watch or similar item up to the exclusion of $400 (and $1,600 for qualified plan awards).


Client Profile is based on a hypothetical situation. The solutions discussed here may or may not be appropriate for you.


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