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Anonymous PAYROLL IN-CHARGE

Are gift certificates issued to employees as their honorarium taxable?

Asked on May 12, 2014

Are gift cards to employees taxable as income? Some of our employees opted for a gift certificate issuance instead of giving it on cash basis, thus, we cannot withhold tax for that account. I want to know if there is such a BIR Ruling that will be violated especially if we will purchase worth P200,000.00 of GC for 10 employees. Thanks and more power!

Answers

Sara Voight Controller • February 28, 2014

I'm not sure where you are reporting (country?), but I read the IRS regs as taxable if over $75. You technically need to gross up wages, and then pull an after tax deduction for the same amount to make sure you are including in taxable wages for the employee and they are having the correct amount of taxes taken out. Many people, when realizing they cannot skip the tax man, opt back in for the straight bonus.

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