From: Seattle, WA

Dear TaxMama,

Our small company would like to give a $100 cash bonus to six employees. Are there tax implications?

Thank you!

Sharon

 

 

 

Hi Sharon,

That's so generous of you.

Yes, the tax implication is - that it must be added to payroll or you must issue a 1099-MISC and list it under prizes.

The prizes part is a little iffy...since they didn't do anything specific, in terms of a contest, to 'win' the money.

I usually just add money like that to payroll.

Or you could use it to throw a great party at place of their choice.

And I'll bet, if you leave it up to them - and give them a total budget, your staff will concoct one heck of a shindig!

Best Wishes,
Eva Rosenberg, MBA, EA