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November 26, 2004 08:24 PM

When Is That Holiday Turkey Taxable?


Excerpt: What’s the difference between the $30 ham or turkey you received from your thankful (and thoughtful) employer around the holidays last year and the $30 gift certificate you received this year? One’s taxable. The other isn’t.


Dear Readers —
Quick — What’s the difference between the $30 ham or turkey you received from your thankful (and thoughtful) employer around the holidays last year and the $30 gift certificate you received this year? One’s taxable. The other isn’t.

In general, all employer-provided benefits (including wages) are considered "income." But there’s an exception for some things because they have such a nominal value that accounting for them is more trouble than it’s worth. These so-called "de minimis" benefits are freebies as far as taxes go. Your employer can deduct the cost of providing them, but the value of the benefit doesn’t have to be reported by each individual who receives it. That holiday ham, for instance.

On the other hand, according to an IRS spokesperson, "if your employer gives you cash, a gift certificate, or something that could easily be exchanged for cash" then this will be included in your taxable income.

It boils down to this: if you receive a gift card you can use at the supermarket to buy your own turkey, this amount will be included on your W-2. Your employer will also have to deduct FICA and all the other usual taxes. However, if you receive an actual turkey, this is not considered "income" and there are no tax consequences.

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