Disclaimer: This advice is intended for informational purposes only. It does not replace the expertise of accredited professionals. Please review the tax laws in your jurisdiction and consult your finance team.
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Taxable Benefit Report Instructions
Sign into an admin Guusto account. From there, go to “Teams” and navigate to “Manage Gifting”. At the top of this page you’ll see a header called “Taxable Benefits”.
From here, you can filter the taxable benefits report by parameters such as date and location:
2. To export the report, click “Export” on the right side of the screen.
This report can be uploaded into most payroll systems. Your payroll systems will then process the information in the taxable benefits report automatically, making it a light lift for your finance team. If you encounter challenges uploading the taxable benefits document, please reach out to your payroll system provider as they can provide more guidance for their specific product.
Taxable Benefits FAQ
What will my employees see?
Once you process the taxable benefit report in your payroll system, the employee’s pay stub, as well as their year-end tax form, will reflect the benefits received.
What is grossing up?
Because the employee will pay taxes on the gift received, some companies will choose to “gross up” the benefit. Grossing-up is the practice of topping up the amount an employee receives to cover the tax they’ll be charged. Let’s say you have an employee at a 30% tax rate who receives a $100 gift card. Without being grossed up, they’ll receive the full amount of the gift card and then have $30 of tax deducted from their paycheck. If you were to gross up the benefit, you would give the employee a $130 gift card with an explanation that $30 of it is to offset the tax deduction. The decision to gross up your employee benefits is an individual business decision and there’s no right or wrong answer.
Are taxable rewards right for you?
We know nobody likes paying taxes. However, employees almost always appreciate receiving a gift that is relevant to them, even if it is taxable. And a taxable gift card, that the employee can spend where they like, is preferable to a set gift card that would be taxed but not necessarily used by the employee.
You may also consider a points-based reward system thinking points can’t be taxed. This is true, the points employees earn won’t be taxed. But as soon as the points are redeemed for a reward the value of the item is taxed the same way a gift card would be. A points system is actually more difficult when it comes to taxes due to a lack of transparency around the value of the reward, which can lead to confusion for your accounting team and your employees. By choosing a gift card-based reward system, the value of the gift is easily understood by everyone.
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Distribute this resource to employees for an outline on tax implications with Guusto rewards: