If your firm gives employees gifts—any gifts— better know what’s taxable
Nontaxable gifts: Fruit baskets, hams, turkeys, wine, flowers and occasional entertainment tickets, such as to a show or sporting event, generally are nontaxable de minimis fringes.
Taxable gifts: Gift certificates (“cash in kind”) are wages subject to FIT, FITW, FICA, and FUTA, even for a de minimis item. For example, a gift certificate for a turkey is taxable, even though giving a turkey as a gift is not. Cash gifts of any amount are wages subject to all taxes and withholding. [26 CFR 1.132-6(e); TAM 200437030]
