Pension & Benefits News IRS reminds employers of changes to employee achievement award rules
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Wednesday, December 19, 2018

IRS reminds employers of changes to employee achievement award rules

By Pension and Benefits Editorial Staff

In Tax Tip 2018-190, the IRS has reminded employers that the Tax Cuts and Jobs Act (P.L. 115-97) made changes to the rules regarding employee achievement awards. The IRS noted that this can affect an employer’s bottom line and its employees’ deductions.

Previous to the Tax Cuts and Jobs Act, employers could deduct the cost of certain employee achievement awards. Deductible awards also were excludible from employee income.

Now, under the Tax Cuts and Jobs Act, there is a prohibition on cash, gift cards and other non-tangible personal property as employee achievement awards. Special rules allow an employee to exclude certain achievement awards from their wages if the awards are tangible personal property. The Tax Cuts and Jobs Act clarifies that tangible personal property does not include cash, cash equivalents, gift cards, gift coupons, certain gift certificates, tickets to theater or sporting events, vacations, meals, lodging, stocks, bonds, securities, and other similar items.

SOURCE: IRS Tax Reform Tax Tip 2018-190, December 10, 2018.

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