Under the de minimis fringe benefit rules, your business deducts the cost of giving you or your employees flowers, fruit, books, and similar property under special circumstances. The recipients—you or your employees—receive these fringe benefits tax-free.
You can’t do this too often or spend too much money. But it’s easy to see that this is a great benefit, especially when you give to yourself.
For your business to make this fringe benefit tax-free, it must meet two requirements—value and frequency. Here the IRS has not been very helpful in defining either criterion. With some research, we arrived at $70 as the maximum value for the flowers, fruit, books, and similar property.
How often is too often? The IRS doesn’t say, but it adds some common sense to the regulation with this guidance as to when this fringe benefit is appropriate: “Examples of de minimis fringe benefits are … flowers, fruit, books, or similar property provided to employees under special circumstances (e.g., on account of illness, outstanding performance, or family crisis).”
Just don’t use gift cards or certificates. The IRS considers the coupon or gift card taxable to the recipient no matter how small the amount, even if that small amount is used solely to buy the flowers or fruit.
In conclusion, if you have wonderful employees (including yourself), it is smart to recognize their outstanding efforts and reward them for a job well done!
We specialize in helping clients clarify their taxes so they keep more of their money. Many small business owners who come to see us in Fort Worth, TX generally do not understand the tax law enough to explain it to a fifth grader.
If you or someone you know is self-employed or a small business owner, please feel free to contact me by scheduling a call, or by emailing at [email protected].
Tatsiana B. Bender
Bender CPA, PLLC
Fort Worth, TX 76107
[email protected]
Phone: (817) 313-4352
Bender-CPA.com
