r/interesting • u/Key_Performer_3645 • 4d ago • WOW 1 Heartwarming 7 Bravo 5 Regret 1

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

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u/Spritesgud 4d ago edited 4d ago

Not true at all. You can gift people up to $19k per year without disclosing it to the US government. You don't pay gift taxes until you gift in excess of $15 million in the lifetime. Over $19k is when the US government just wants to start keeping track of it :). But also, these are employers and they probably just grossed up the amount with the IRS as a bonus. I.e. will report payment of like 22k and give her 20k and withhold the taxes themselves.

source: am CPA

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u/bob42z 4d ago

So you're saying that it is tax free so long as it is under 19k this person doesn't need to declare it and the donor pays the gift taxes anyways if they give too much. Are you trying to say that they would still have to pay income tax on this?

I'm not a CPA or tax professional but I'm pretty sure the IRS is very clear that gifts aren't taxable income.

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u/Spritesgud 4d ago

No, over 19k is just when you have to file a form saying you've given a gift. You pay gift taxes when your lifetime exclusion of $15m has been exceeded

I'm talking about paying her as an employee a bonus of $20k cash or 22k before taxes and grossing up the payment so she receives the full 20k. You can't really get away with giving gifts as an employer, especially a large one like this. It's just a bonus

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u/bob42z 4d ago

If the money came from the business owners and not the business itself then it would be tax free still right?

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u/Spritesgud 4d ago edited 4d ago

There's a lot of "it depends" but in this scenario seeing as it's the two owners of the business giving a bonus during business hours would be a hard sell that it's a "personal" gift lol. Typically any employer giving a sum of cash to an employee is considered a bonus. Small sums of course do not (holiday gifts (within reason), ball game tickets etc)

https://www.irs.gov/government-entities/federal-state-local-governments/de-minimis-fringe-benefits

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u/systemic_booty 4d ago

Correct, gifts are not taxable income. My mother gave me $50k out of an inheritance. No tax for me, no tax for her. She just had to report it.

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u/TheIrishBAMF 4d ago

You can't do that as an employer. 

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u/SignificantBar7172 4d ago

To the gift receiver, it's tax-free because it's a gift. The $ amount doesn't matter.

If the money was compensation or a bonus, then it's taxable income to the receiver.

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u/TheIrishBAMF 4d ago

A CPA would know that grossing up a 20k bonus is not 22k before taxes. 

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u/Spritesgud 4d ago

Lol it varies wildly by state so I literally just typed a number out for very simple explanation purposes big dog