No, it’s not here yet. But before we reach the peak holiday gift giving season, it’s important to remember some key issues that can impact your bottom line. The IRS will always get their share. According to the American Institute of Professional Bookkeepers (AIPB), here are some things to remember.
- You gave Jim a gift certificate for a Christmas turkey. (Did your bookkeeper remember to apply federal income tax withheld, Social Security, Medicare and other employment taxes?)
- You handed Alice a production bonus for working overtime to meet the order. (Did Payroll include the bonus in their regular wages when calculating their overtime pay?)
- You left Bill two basketball tickets on his keyboard with a "thanks for your hard work." (Did your company pay its share of Social Security, Medicare, and other employment taxes on their cost?)
- You presented Alice´s gold watch at her retirement party. (That´s taxable? You bet, all employment taxes apply.)
- You announced Bob´s $50 suggestion award at the company party. (Hope you didn’t tax that-if you followed the peculiar rules on eligibility, amount and how it is presented.)
Unfortunately, ignorance of the tax law is no excuse in an IRS or Wage-Hour audit. So the AIPB is trying to help. They are offering a free report, "Bonuses, Gifts, Prizes and Awards-What´s Taxable, What´s Not," to anyone requesting it by e-mailing firstname.lastname@example.org. If you are planning on employee gift giving this season, it may just save you a few bucks and a big headache.