My employer recently gave me a $25 grocery store gift card for the thanksgiving holiday weekend. The amount was reported as income and there was a miscellaneous deduction taken out of my paycheck. Is this the correct way to treat the gift?

ANSWER

The BIDaWIZ Team's Answer:

If we understand your question correctly, your employer is correct in treating the gift as taxable income per IRS guidelines. Store gift cards are included in an employeeâ??s taxable income per IRS publication 963 and IRC Section 1.132-6(a). Gift certificates/cards that are redeemable for general merchandise or have a cash equivalent value are not de minimis benefits. The miscellaneous deduction is likely to reflect the amount of taxes to be withheld on that income.