I think it’s immaterial whether every spouse got a gift or not. The primary consideration is intent. It doesn’t have to be solely for renumeration of services – it could be an expectation of future work (i.e. keeping the spouse happy ensures that the employee stays put). To me, unless there is an existing relationship with the spouse not connected to the employment (maybe they went to college together), the gift is really to the employee – and even in that event, looking at the circumstances, that’s a tough argument to make to IRS. Most adults don’t give non-familial adults cash gifts in excess of $250 not related to employment – that to me is an extraordinary circumstance which would raise eyebrows at the IRS. And cash gifts to employees are never considered de minimis.

Did “all” employee’s spouse’s receive an amount? Were all the amounts the same? What was the intent of the “gift”?

If the “gift” was in fact a gift and therefore not deductible on the part of the donor’s tax return and the amount to each individual recipient is rather small but could be a considerable amount of total gifts. Then it would be beneficial to the IRS that the gifts were in fact gifts.

Whereas if the “gift” was a renumeration for services, the “gift” would be deductible on the part of the donating company as well as income on the part of the recipients. The renumeration deduction would probably generate a much greater savings on the employer’s part than the income would generate increased tax on the recipient’s part.

But if the recipient spouse was received as a result of considerable lengthy of service or special achievements That were always given whenever the applicable accomplishment was performed the amount would not be large enough that it would exceed apropriate gift.

For example, when my father had worked for his employer 35 yrs he received a gold watch that was not included in his w-2 it would have cost much more than $250.

Jeff Day EA
Evansville, IN