Work bonuses

LibbyLizApril 30, 2007

Are bonuses from your place of employment around Christmastime considered a gift, or part of the wages?

Does it matter if it's a gift card or check?

I figure if it's cash then it's taxable.

I'm concerned that if it was supposed to be factored in with the year-end taxes.

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steve_o

At my employer, bonuses (such as they are) are "grossed up" so that the taxes and other deductions made to income are extracted without affecting the stated amount of the bonus (for example, I recently got a $50 bonus that was grossed up to around $70). That will be considered income come tax time. If you see no indication that there were taxes paid for the value of the bonus, I would treat it as a gift, not as wages.

n.b., I am not a tax attorney, accountant, or the IRS. :-p

    Bookmark   April 30, 2007 at 10:46AM
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LibbyLiz

I recently got a $50 bonus that was grossed up to around $70). That will be considered income come tax time.

If you see no indication that there were taxes paid for the value of the bonus, I would treat it as a gift, not as wages.

I talked with someone else about this before checking for a reply. So I'm putting yours & his reply together.

It was a gift card to a mass retail store. So it was a gift. Just like if a relative or friend gave it to me.

However, if it was added into the regular pay check, then it would be taxable.

And if it were a separate check deposited into an account to add interest, then it would be taxable, but not if cashed.

I think I understand.

    Bookmark   April 30, 2007 at 3:46PM
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dgmarie

I think you should check with your employer if he is accounting for that in your W2.

    Bookmark   May 2, 2007 at 3:47PM
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bentruler

http://www.irs.gov/publications/p463/ch03.html

I was a bit annoyed when the $10 gift card showed up on my paystub. Mostly because it was to somewhere I had no itention of going.

    Bookmark   May 3, 2007 at 3:55AM
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talley_sue_nyc

ooh, that's mean--putting the $10 gift card on the paystub.

I'd be really tempted to write an anonymous note and drop it interoffice to the HR department. Not nasty or anything, but just pointing out that it wasn't much of a gift, what with being taxed, AND being to some place you'd never go. I mean, honestly, $10? The gas to go to the store would eat up the money left over after taxes.

One year we got a $100 gift card at Christmas, and I don't remember if that was on the paystub or not; i didn't look, but I had assumed it wasn't.

When we get year-end BONUSES, that's given to us as a paycheck, w/ taxes taken out (and our employer does NOT "gross it up," or add on that they are payng the taxes; I've never had that happen, even w/ a $500 "merit" bonus)

    Bookmark   May 3, 2007 at 9:42AM
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bentruler

In all honesty, they did aslo put an extra $3.60 in cash in the check to cover the taxes. It was still a WTH?

    Bookmark   May 4, 2007 at 7:32PM
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saphire

REgift it to someone who can use it

    Bookmark   May 5, 2007 at 10:07AM
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talley_sue_nyc

what kind of store was it? At some stores, you'd have to pay $5 MORE to be able to buy much of anything, bcs everything costs more than $10.

I'm w/ saphire; about the only way to make that worthwhile is to REgift it to someone who would use it.

But even then, you only come out ahead if that's a person to whom you would have given that gift anyway, and you're simply mpving your assets around.

That link doesn't tell much that relates; it says businesses CAN deduct gifts as legitimate business expenses, but I'm not sure that means "payroll," and it also has no bearing on whether they MUST count gifts as "compensation."

    Bookmark   May 7, 2007 at 2:03PM
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