Answer: Yes. A non-cash Christmas gift will not be considered wages subject to employment taxes if the gift is of nominal value. The value of a turkey or ham is of nominal value and will not constitute wages. However, if the company presented to each of its employees a $25 gift certificate, this would constitute wages subject to tax. Gift certificates of nominal amounts may be subject to employment taxes. Such certificates or similar items of readily convertible cash value are included in wages. Gift certificates redeemable in merchandise are not included in wages.
Christmas gifts that are given to employees are generally presumed to be compensatory in nature and are treated as wages for FICA, FUTA, and federal income tax withholding purposes. The fact that a payment is made voluntarily or that the company receives no economic benefit from making it is not enough to overcome the presumption that the payment is compensation for services rendered.
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The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.