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Common this time of year you will many want to reward your employees with a holiday bonus. This will recap how to remain compliant with the IRS and still be able to bring holiday cheer to your hard working employees.

  • All cash bonuses are considered compensation, so like wages they are going to be taxed. They should be run through your payroll provider so the correct taxes are taken out.
  • Not all bonuses need to be cash, sometimes a tangible gift with a bow will do the trick
  • Lastly some companies offer an extra paid day off in lieu of a cash bonus

Read this article from Workest for more on the nitty, gritty of a holiday bonus versus a year end performance based bonus.


Blog by Jason P. Bailey, CPA – Business Services Manager, Tax Professional

Learn more about Jason and the rest of the Storen Financial team here.