Tax Changes Impacting Non-Cash Awards and Other Gifts for Employees

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 following the procedure described below the table.  

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

If cost or value exceeds limit, only the amount in excess of limit is subject to withholding as income
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).

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. Note that UC Policy G-41 is currently being reviewed and does not yet reflect the tax act changes. The next revision of UC Policy G-41 may include other changes in addition to those required by the tax act. Look for a future communication when the revised policy becomes available.

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 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. This form must be submitted within 30 days of the employee’s receipt of the taxable award or gift. For more information on reporting awards and gifts as taxable income, see Understanding the Taxability of Employee Non-Cash Awards and Gifts on the Controller’s Office website.

If you have questions about the application of these changes, contact the Controller’s Office Solution Center.