December 2017: A few Tax Tips to Reduce Your Taxes!
NOTE: Not all tax tips are applicable to all taxpayers. Please consult with your tax adviser/professional to see if these tips may work for you.
Tip #11: Give tax-free holiday gifts to your employees and get a tax deduction
It’s holiday time and there are some tax favored ways in which you can provide gifts to your employees and get a tax deduction for the value of the gift! Here are a few thoughts to keep in mind (from a tax perspective) in this holiday season.
- If the gift qualifies as a “de minimis fringe benefit”– the value of the holiday gift is NOT included in the employee’s wages or salaries for the year. This makes it a non-taxable fringe benefit.
- The employer is permitted a tax deduction for the value of the gift (what the employer paid for the gift). This is a nice planning opportunity given that the employee does not pay any taxes on the value of the gift.
- A “de minimis fringe benefit” is generally provided by the employer on an infrequent basis and has a low fair market value.
Here are a few examples:
- Food products (such as a turkey, ham, cheese/fruit basket, etc.).
- Entertainment tickets (theater/music/movie/sporting events, etc.)- but watch the value.
- Holiday parties/dinners, etc.
- Flowers,books, other specific gifts of a low fair market value
Here are a few items that are NOT considered to be a “de minimus fringe benefit”:
- Cash- no matter how small or large the amount.
- Gift certificates, debit cards or similar items that are convertible to cash- no matter how small or large the amount. However, if a gift certificate is convertible to only a turkey/ham/food basket at a certain retailer, it is considered to be a “de minimis fringe benefit.”
These rules allow all employees, including owners of a LLC (taxed as a partnership) and more-than-2% S shareholder-employees, to receive the above tax-free de minimis fringes.
Prior Tax Tips for 2017:
Tip #1: Defer income and accelerate tax deductions.
To view: https://www.linkedin.com/pulse/2017-tax-planning-tip-1-scott-estill/
Tip #2: Watch any Roth IRA Conversions in 2017
To view: https://www.linkedin.com/pulse/2017-tax-planning-tip-2-roth-ira-scott-estill/
Tip #3: Preserve your State and Local Income Tax Deductions
To view: https://www.linkedin.com/pulse/tip-3-preserve-state-local-income-tax-deductions-2017-scott-estill/
Tip #4: Businesses: Buy Equipment in 2017 rather than 2018!
To view: https://www.linkedin.com/pulse/tax-tip-4-businesses-buy-equipment-late-2017-rather-than-estill/
Tip #5: Use a credit card in 2017 to preserve tax deductions
To view: https://www.linkedin.com/pulse/tax-tip-5-use-credit-card-2017-preserve-deductions-scott-estill/
Tip #6: Consider the Alternative Minimum Tax (AMT) and how to plan now to reduce or avoid for 2017.
To view: https://www.linkedin.com/pulse/tax-tip-6-beware-amt-trap-scott-estill/
Tip #7: Make sure to consider gifts in your overall tax planning strategy for 2017.
To view: https://www.linkedin.com/pulse/tax-tip-7-gifting-strategies-reduce-taxes-scott-estill/
Tip #8: Minimize or Eliminate the Tax on Investment Income.
To view: https://www.linkedin.com/pulse/tax-tip-8-minimize-eliminate-investment-income-scott-estill/
Tip #9: Harvest stock market losses to offset Capital Gains income
To view: https://www.linkedin.com/pulse/tax-tip-9-harvest-stock-market-losses-offset-capital-gains-estill/
Tip #10: Where you live matters (a lot) for tax purposes
To view: https://www.linkedin.com/pulse/tax-tip-10-where-you-live-matters-lot-purposes-scott-estill/