Understanding the Taxability of Employee Non-Cash Awards and Gifts
The Federal Tax Cuts and Jobs Act (P.L. 115-97) signed into law on December 22, 2017 changed the taxability of some non-cash awards and other gifts provided to employees. If an award or gift (or portion of an award or gift) is taxable, applicable income tax withholding and FICA taxes will be deducted from the employee’s paycheck.
Beginning on April 1, 2018, departments are responsible for reporting taxable awards and gifts, and should consider the tax consequences for the employee receiving an award or gift when providing non-cash awards and gifts. Use the table below to determine whether the award or gift is taxable and must be reported on the Taxable Employee Non-Cash Award or Gift Reporting Form. This reporting form is required for all taxable employee awards or gifts regardless of whether the award or gift was purchased directly from a supplier using BearBuy or procurement card (P-card), reimbursed using MyExpense, or obtained using any other method.
Summary of Tax Treatment
Subject to withholding as income regardless of amount. Cannot exceed per-person limit.| Award or Gift Type | Award or Gift Item | Per-Person Limit# | Tax Treatment |
|---|---|---|---|
| Employee Recognition (including Spot Awards) | Tangible Personal Property and Nonnegotiable* Gift Cards or Gift Certificates |
$75 |
Under limit, not taxable If cost or value exceeds limit, then entire amount is subject to withholding as income |
| One Month Parking Permit, One Month Transit Pass |
$260 |
Full cost or value is subject to withholding as income | |
| Length of Service | Tangible Personal Property |
$400 |
Under limit, not taxable Cannot exceed per-person limit |
| Nonnegotiable* Gift Card or Gift Certificate for Tangible Personal Property |
$400 |
Subject to withholding as income regardless of amount Cannot exceed per-person limit |
|
| Retirement | Tangible Personal Property |
$400 |
Under limit, not taxable If cost or value exceeds limit, only the amount in excess of limit is subject to withholding |
| Nonnegotiable* Gift Card or Gift Certificate for Tangible Personal Property |
$400 |
Full cost or value is subject to withholding as income | |
| Sympathy Gift | Tangible Personal Property |
$75 |
Under limit, not taxable If cost or value exceeds limit, then the full cost or value is subject to withholding as income |
| Cash Contributions |
$200 |
Contributions are made in the name of the University, therefore not taxable | |
| Prizes and Other Gifts | Tangible Personal Property and Nonnegotiable* Gift Cards or Gift Certificates |
$75 |
Under limit, not taxable If cost or value exceeds limit, then the full cost or value is subject to withholding as income |
|
*Must confer only the right to receive tangible personal property, not cash or cash for the difference between the purchase price and the value of the gift card or gift certificate (e.g., department store, other retail cards, and stored-value bank cards). In addition to the prohibition on cash and cash equivalents, gift cards or gift certificates cannot be redeemable for services, vacations, meals, lodging, tickets to theater or sporting events, memberships, or similar non-tangible items. #The per-person limits exclude incidental costs such as engraving, packaging, insurance, sales tax, mailing, and the cost of gift wrapping that does not add substantial value to the gift. |
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See UC Policy G-41, Employee Non-Cash Awards and Other Gifts for definitions and more details including unallowable forms of gifts and awards, and additional requirements for certain forms of gifts.
Reporting Taxable Gifts and Awards
Departments who chose to present a taxable award or gift to an employee are required to submit a Taxable Employee Non-Cash Award or Gift Reporting Form. This form must be submitted within 30 days of the employee’s receipt of the taxable award or gift.
The Taxable Employee Non-Cash Award or Gift Reporting Form is an interactive PDF document and cannot be completed in your web browser. You must download and open in Acrobat or Acrobat Reader to enter and process your submission.
Although use of the form is preferred, you can also report taxable employee non-cash awards or gifts by sending an email to the Controller's Office Solution Center that contains all of the information required in the form.
Contact Information
If you have questions, contact the Controller’s Office Solution Center.