Exploring the Convenience and Versatility of Cash Equivalent Gift Cards

Cash equivalent gift cards have become a popular gifting option for many due to their convenience and versatility. These gift cards allow the recipient to choose what they want, making it a better alternative to traditional gifts. Moreover, they can be used online or in-store, making them an excellent option for those who prefer to shop from the comfort of their homes. In this article, we will explore the benefits of cash equivalent gift cards and how they can enhance the gifting experience.

What are cash equivalent gift cards?

Cash equivalent gift cards are prepaid cards that can be used like cash to purchase goods and services from various merchants.

How are they different from traditional gift cards?

Unlike traditional gift cards, cash equivalent gift cards can be used to make purchases anywhere that accepts credit or debit cards.

What are the benefits of using cash equivalent gift cards?

Using cash equivalent gift cards can provide convenience and flexibility as they can be used at a variety of merchants and can be reloaded with additional funds.

Are there any drawbacks to using cash equivalent gift cards?

Some drawbacks include potential fees for activation or reloading, and the possibility of losing the card and the funds on it if it is not registered or reported as lost or stolen.

How can cash equivalent gift cards be a great gift option?

Cash equivalent gift cards can be a great gift option as they allow the recipient to choose what they want to purchase and where they want to shop.

2. These gift cards can be used at a variety of stores and online retailers, providing users the flexibility to choose where and how they want to spend their gift.

In general, a de minimis benefit is one for which, considering its value and the frequency with which it is provided, is so small as to make accounting for it unreasonable or impractical. De minimis benefits are excluded under Internal Revenue Code section a 4 and include items which are not specifically excluded under other sections of the Code. These include such items as. In determining whether a benefit is de minimis, you should always consider its frequency and its value. An essential element of a de minimis benefit is that it is occasional or unusual in frequency. It also must not be a form of disguised compensation. Whether an item or service is de minimis depends on all the facts and circumstances. In addition, if a benefit is too large to be considered de minimis, the entire value of the benefit is taxable to the employee, not just the excess over a designated de minimis amount. Cash is generally intended as a wage, and usually provides no administrative burden to account for. Cash therefore cannot be a de minimis fringe benefit. An exception is provided for occasional meal or transportation money to enable an employee to work overtime. The benefit must be provided so that employee can work an unusual, extended schedule. The benefit is not excludable for any regular scheduled hours, even if they include overtime. The employee must actually work the overtime. Meal money calculated on the basis of number of hours worked is not de minimis and is taxable wages. Cash or cash equivalent items provided by the employer are never excludable from income. An exception applies for occasional meal money or transportation fare to allow an employee to work beyond normal hours. Gift certificates that are redeemable for general merchandise or have a cash equivalent value are not de minimis benefits and are taxable. A certificate that allows an employee to receive a specific item of personal property that is minimal in value, provided infrequently, and is administratively impractical to account for, may be excludable as a de minimis benefit, depending on facts and circumstances. Special rules apply to allow exclusion from employee wages of certain employee achievement awards of tangible personal property given for length of service or safety. These awards. In addition, there are other requirements specific to achievement and safety awards and there are dollar limitations that must be met. If the benefits qualify for exclusion, no reporting is necessary. If they are taxable, they should be included in wages on Form W-2 and subject to income tax withholding. If the employees are covered for social security and Medicare, the value of the benefits are also subject to withholding for these taxes. You may optionally report any information in box 14 of Form W More In File. These include such items as Controlled, occasional employee use of photocopier. Cannot be cash, cash equivalent, vacation, meals, lodging, theater or sports tickets, or securities. Page Last Reviewed or Updated Jul Share Facebook Twitter Linkedin Print.
A gift card or e-gift card can be a great way for both businesses and individuals to show appreciation. Gift cards given to employees count as taxable income and must be reported on Form W-2 , but people often incorrectly assume that gift cards are covered under de minimis fringe benefit rules. Unfortunately, gift cards are another story. According to the IRS, since cash and cash-equivalent fringe benefits like gift certificates have a readily-ascertainable value, they do not constitute de minimis fringe benefits. Furthermore, if the employee is covered for Social Security and Medicare, the value of benefits are also subject to withholding for these taxes. Awards and gifts of minimal value like a holiday turkey, for example generally fall under the de minimis rule and are not taxable. It can be hard to determine what exactly is considered minimal, though, since the IRS has never put a specific dollar amount on the de minimis fringe benefit. However, they have provided some examples. Commonly encountered fringe benefits include. The common thread in the above examples is frequency. Frequency is a huge deal when it comes to de minimis fringe benefits and what does and does not need to be reported. Are you sick of being bogged down by reporting requirements? Give yourself the gift of more free time. It is highly unlikely that you will go through filing season and not come across one required correction, but correcting forms is easy once you understand the process. An important aspect as you close out and enter is your employer-employee relationship and how you are handling payments to those . Running a business never comes with a shortage of to-do items, especially when it comes to year-end planning. Are Gift Cards Taxed? Want to learn more about how to correctly fill out your W-2s? Learn More See what more we can bring to organizations just like yours. Related Insights.