Gift Ideas Faqs
If a contractor is given a monetary gift does it need to be included in their 1099?
Monetary gifts are $25.00 gift cards, gas cards for $50.00, etc. According to the IRS the following is for employees: "Gift certificates - Cash or cash equivalent items provided by the employer are never excludable from income...Gift certificates that are redeemable for general merchandise or have a cash equivalent value are not de minimis benefits and are taxable." I am asking about NON-employees (outside contractors/sub contractors).
Public Comments
- It should be, yes. The IRS views certain small items as "de minimis" if they are infrequent and not cash or cash equivalents. Your example would be considered as a disguised form of compensation by the IRS. If you receive these gift cards, and they are not included on your 1099, the IRS would expect you to report them as income. Look up de minimis on Wikipedia or the IRS website for some examples. This question cannot be answered completely in this forum. As always, consult with a tax professional for specific answers. CPAGreg
- Even the gift card is includable in income if it is easily convertible to cash. (Eg, gift card to sears, no; visa gift card, yes.) Multiple gifts breaks the deminis rule.
