The holiday season is upon us, a time when many employers share a token of appreciation for their hardworking employees. Whether it’s through a bonus, gift, party, an afternoon off, or a simple pat on the back, showing any kind of gratitude and appreciation for the efforts of your workforce does not go unnoticed.
However, as of 2022, there may be some new challenges to provide the best gift that is well-received by remote, hybrid, and local employees equally. Here are some considerations, while also keeping in mind the tax impact of holiday gifts and employer-provided meals.
Gift Considerations for Hybrid and Remote Employees
Pre-2020, when most small businesses had the majority of their team members on-site, physical gifts were a little less complicated. Enter the pandemic and the remote work revolution, and now small businesses have employees working from home, some of them not even local to the office anymore. Why does this present a challenge?
- The added logistic of shipping gifts or securely mailing gift cards can vary greatly depending on where the employee is located. Plus, some states have restrictions on shipping certain gifts such as wine and alcohol.
- It is important to pay attention to the locality of the gift card. An out-of-state employee won’t have use for a local restaurant/business gift card or something native only to a specific region (i.e. while a Wawa gift card is convenient for Philadelphia and South Jersey residents, there is not a Wawa located in every state).
- Although, it is not limited to just remote employee considerations, but sometimes it’s a challenge to find one gift card that suits every employee’s preferences. Does everyone really like coffee or going to the movies? Does everyone have an Amazon or an Apple account? It’s tricky to accommodate the masses if you don’t want to just gift cash.
Debit Gift Cards as a Holiday Gift
One solution that addresses the above considerations is a debit card gift card. This allows the employee the flexibility of choosing exactly where to spend their holiday gift. With Abacus Payroll’s reward card system, you can even personalize and brand the debit gift card, offering a truly special touch.
Backed by Visa, these cards offer the benefits of a cash gift, but with less risk of loss or theft. Even for remote employees, the gift card can be securely distributed electronically, instantaneously.
Depending on your business type and industry, debit card gift cards are also scalable in the event you want to personalize them as a customer appreciation gift, too.
Are Employee Gifts Taxable?
In general, cash, gift cards, and other cash equivalents are considered taxable income and are subject to the appropriate payroll reporting and withholding procedures. De minimis fringe benefits however are not taxable; these “gifts” are typically low-value and are infrequently distributed.
Gifts to customers and clients are tax deductible up to a maximum of $25 per recipient per year.
Employee Holiday Party Planning
After two years of limited social gatherings and seeing co-workers less frequently, another way to celebrate and reward your staff is an end-of-year holiday party. If “presence” will be your present this year, know that company holiday parties are typically fully tax deductible.
In addition, the 100% tax break on business meals provided by an employer from a restaurant is still in effect for 2022. They are expected to revert to 50% as of the 2023 calendar year.
Contact Abacus Payroll
Gift yourself easier, friendlier payroll this holiday season. Our payroll specialists will help you prep for year-end and can help you gift these reloadable debit cards to spread cheer to your hardworking employees. Give us a call today to discuss your payroll goals for 2023.