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How De Minimis Gifts Could Affect Your Federal Tax Burden

Posted by Admin Posted on Nov 02 2018

A gift of a small value that is irregularly given is considered a "de minimis" gift by the Internal Revenue Service (IRS). Accounting for these gifts could be an unreasonable burden on an employer. If your business offers de minimis gifts to employees, it is a good idea to work with a tax accountant in Las Vegas in order to understand their full federal income tax implications.



What a De Minimis Gift to Employees or Clients Is

The IRS has definitions of what constitutes a de minimis gift. Several parts of the tax code state what most other gifts are and how they affect federal income taxes for businesses. The IRS explains that a de minimis gift could include controlled and occasional use of a business copier, rare personal use of an employer-provided cell phone for work or a group life insurance policy valued under $2,000. Other de minimis gifts include coffee or doughnuts occasionally provided by the employer, tee shirts with the company's logo or pens with the company's logo for personal use.



Frequency of the Gift

A de minimis gift must be infrequent and irregular. Employees should not come to expect it, and it should not be provided on a routine basis. For example, providing coffee and doughnuts once every couple of weeks or months would be a de minimis gift. Having them available every day would not qualify as de minimis.



Value of the Gift

The value of the de minimis should be low, and it should not be traded for cash benefits. For example, the value of a cup of coffee and doughnut provided by the employer to the employee is low. It could not be traded for a cash benefit to the employee. The IRS states that any gift, no matter how infrequently it is given, cannot be considered de minimis if it has a value of $100 or higher.