We see a lot of end-of-year gift expenses, such as gift cards or money, go towards employees. While we fully support this showing of gratitude, we do want you to be aware of how the IRS views it. If you give gift cards or money from the business, the IRS requires you to add it to the employee's W-2 as supplemental wages, which also withholds taxes. We know how it sounds (crazy), but don’t shoot the messenger.
Unfortunately, the same as above. The only difference is that you would have to pay them over $600 (collectively for the year), and then they need to report that income on their 1099, which your business will issue. They will also have to pay taxes on that.
Gifts are great ways to say thank you - just keep in mind we can only write off $25 per gift, so anything over gets counted towards the Owner's Draw account.
How to Deduct Client Gifts — Bastian Accounting for Photographers
IRS Publication 463: Travel, Gift, and Car Expenses
IRS Publication 535: Business Expenses
IRS Publication 15-B: Employer's Tax Guide to Fringe Benefits https://www.bastianaccounting.com/blog/gifts-contractors-employees