Royal Recognition knows a thing or two about tax deductible employee awards.
In the United States, the IRS allows businesses to deduct up to $1,600 for qualified employee achievement awards in any given calendar year. But what makes an award qualified?
In sum, qualified award means an item that is given to an employee by an employer to honor an achievement.
To help you draw the line between deductible and non-deductible, we’ve created a little quiz. We hope you enjoy it!
Is it deductible?
Congratulations! You’re an expert on the tax benefits of employee reward programs.
#1. Travel Vouchers
Travel vouchers will be taxed.
#2. Vera Bradley Bag
A Vera Bradley bag, or any other high-end brand bag, if part of a qualified Length of Service award program is tax deductible.
#3. Achievement Plaque
An achievement plaque is absolutely tax deductible.
#4. Money or Cash
Money is treated as an exchange of currency, and therefore is taxable.
#5. Gift Cards
Gift cards, while more presentable than cash, are still considered money. Gift cards are not tax deductible.
#6. Safety Award
Safety Awards do qualify for tax deductions with caveats. According to the IRS:
An award for safety achievement will qualify as an achievement award unless one of the following applies.It is given to a manager, administrator, clerical employee, or other professional employee.
During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value).
Please visit the IRS’ website for more information on Safety Awards.
#7. Weber Genesis Grill
If the gift is part of a qualified Length of service award program and given as part of a meaningful presentation, the item is tax deductible.
The above quiz was created by Royal Recognition for advertising purposes and is not meant to be used as legal advice. For actual IRS guidelines, please visit irs.gov.