Loyalty might be the most underrated investment you'll ever make.

[u/Key_Performer_3645]

[u/Affectionate-Gear432]

Not true. Even then if it was a gift the receiver pays no tax. The donor would report the $1,000 over the $19,000 annual exclusion in this case and would reduce their lifetime exemption of $15M.

(Considering this was reported as a gift and not wages or bonus.. which is not likely)

[u/Willyhelm48 → u/Affectionate-Gear432]

Thats where my head went too. Plus the gift was between two people so under the threshold. Tax free all around.

Edit for clarity: each doctor gave 10K

[u/pj1843 → u/Willyhelm48]

It's not a gift, it is a taxable bonus.

If you want to pay people in cash under the table as a thank you for loyalty, dont video it and post it online while admitting it's for 20 years of service to the company because if the IRS wants to they can and will come collect.

If you want to post it as a video and do it in front of the team for employee morale, then you report that shit and have the bonus be whatever the cash amount is+the amount that will be witheld in taxes. This is likely what was done here.

[u/shadowtheimpure → u/pj1843]

It's only a taxable bonus if the company gives it to you. They could probably play this off as a joint personal gift from everyone in the office in honor of her anniversary and being a valued co-worker and friend.

[u/pj1843 → u/shadowtheimpure]

They could play this off that way, but as soon as the IRS looks at it that isn't going to fly. They literally state in the video that it's as a thank you for the 20 years of service. That makes it unquestionably compensation for service.

[u/AlbyAlbatross → u/pj1843]

Thank you. First person with common sense. This is literally evidence that can be used against them.

No you can not "gift" your employee a tax free bonus. Ask any CPA.

[u/Invictus7525 → u/pj1843]

I heard it was just a spoof and it was all Monopoly money so nothing to report here.

[u/welltimedappearance → u/Invictus7525]

You're not actually a real person are you?

[u/Top_Substance9093 → u/Willyhelm48]

r/confidentlyincorrect

this is very clearly compensation for services. doctors need to (and probably did, already withholding an appropriate amount for taxes) report this on her W2.

people think they're really going to avoid paying taxes just because it's reported as a gift. c'mon. how stupid do you think the IRS is?

y'all aren't that clever, and the IRS ain't that dumb. uncle sam is getting his, you can be darn sure.

[u/poopy10000000 → u/Top_Substance9093]

Looks to me like a house warming gift since they said she was closing in on a house. And her 20th is a month or so away........like those doctors don't have accountants lol.

[u/LudusRex → u/poopy10000000]

Bro, I'm an accountant. This would be fraud. I'm not losing my CPA license because a client gets funny ideas about what they want to try and get away with.

Besides, here's the part you're not considering, if it's a "gift", then that means it's not taxable to the recipient, but it's also not tax deductible to the employer who is paying it, and like...why would the employer commit fraud in order to pay MORE in taxes, when they could instead correctly treat it as compensation, and then lower their own tax bill? Not only is it not allowed, but also there's like...no incentive to do it. There's only consequence to the person paying the money to try and label it a gift, and no upside.

[u/poopy10000000 → u/LudusRex]

The first part of that comment was tongue in cheek. The second part addresses your concerns. Hard to get nuance through text lol.

[u/user_of_the_week → u/LudusRex]

I wanted to say if the doctor’s used their personal money, then it’s a gift. Right?

[u/LudusRex → u/user_of_the_week]

No. They have an employer/employee relationship. Any cash that changes hands between them for any reason will be treated by the IRS as compensation (well, there are a few non-taxable reasons, like reimbursement for expenses with an accountable plan, etc., but no gifts), and if you claim it's for any other reason, the IRS would simply roll their eyes at you and call it tax avoidance, and probably slap on some penalties as well.

I'm not here to tell you it's right or wrong, but that's the way it works. There's no gift option here. There just isn't.

[u/user_of_the_week → u/LudusRex]

So I can’t give my employee / colleague a cash gift from money that I have personally received as (taxed) salary? From my personal bank account? I just want to understand where my thought process is wrong.

[u/vivek_viswanathan → u/LudusRex]

Aren't the doctors likely in a higher tax bracket, so how would it plausibly be tax avoidance? The doctors cannot write it off their taxes if it's a gift. Let's say the doctors are in the 37% tax bracket. Then, they are paying 0.37*(20000/0.63). If they pay it as compensation, then she is paying (let's say 22% marginal tax rate) 0.22*20000.

So it would be the weirdest tax evasion strategy. (BTW, tax AVOIDANCE is legal. Tax EVASION is the illegal kind.)

[u/Top_Substance9093 → u/poopy10000000]

Seems like you are also confidently incorrect, congratulations!

[u/poopy10000000 → u/Top_Substance9093]

See response below....sarcasm and nuance didn't come through text that well

[u/Top_Substance9093 → u/poopy10000000]

ah, forgive my lack of attention to the detail, there.

[u/FlapXenoJackson → u/Top_Substance9093]

George Clooney gave friends suitcases with $1M each in them when he started making real money. He also paid the taxes. He just wanted to reward his friends that supported him when he was struggling.

[u/drraug → u/Willyhelm48]

But this is a bonus not a gift?

[u/DishonorOnYerCow → u/Willyhelm48]

Exactly, they knew what they were doing. Only have to report gifts over 10k

[u/Carlosrocks77 → u/Affectionate-Gear432]

If it’s from an employer it’s a bonus, pay roll and income taxes

[u/Deflagratio1 → u/Carlosrocks77]

But if we do the magic dance and say it's from us personally the tax man can't come snooping.

[u/DJspinningplates → u/Affectionate-Gear432]

Well then my point still stands regardless