Gift From Boss May Cost You Come Tax Time
By Amy E. Feldman
PHILADELPHIA (CBS) - Think your stingy boss was a scrooge at the holidays? Lucky for you.
Not since Oprah’s ‘you get a car and you get a car and you get a car…’ has an act of generosity gone so viral as when Jennifer Hudson tweeted the reaction of her assistant, Walter Williams, upon learning that Jennifer had bought him a house. And those hoots will be rivaled only upon his howls when he realizes how much that’s going to cost him. As great an employer as Ms. Hudson is (and to be clear, if she needs another assistant, I will put in my application immediately), she probably didn’t realize that a gift to an employee is considered taxable income.
Why? Because the IRS and the courts have found that gifts given to employees are generally meant to thank a person for past service and to provide an incentive for future performance. As such, it’s considered compensation and must be included as wages when filling out your taxes.
Did your employer give you a gift, bonus, or other item of value at the end of the year? No? Lucky you.