Did You Know
Gift Card’s can be given tax-free to employees only if ALL below requirements are met:
- The gift card is given for a special occasion (religious holiday, birthday, wedding, birth of a child) and is notprovided as rewards relating to employee-performance
- The gift card does not exceed $500.00 (including taxes)
- If it does exceed $500.00, the amount over $500.00 becomes taxable
- The gift card is determined to be “non-cash” as follows:
- The gift card comes with money already on it
- The gift card can only be used to purchase goods or services from a single retailer or a group of retailers identified on the card
- The terms and conditions of the gift card clearly state that amounts loaded to the card cannot be converted into cash
- A log is kept to record gift card information containing all of the following:
- Name of the employee
- Date the gift card was provided to the employee
- Reason for providing the gift card (part of social event, gift or award)
- Type of gift card (gift certificates, chip cards, electronic gift cards)
- Amount of the gift card
- Name of the retailer(s)
- The gift card is given to an arms-length employee (not family, not shareholder)
If the gift card does not meet one of the above requirements, it is considered near-cash and is taxable.