Posts tagged as:

bonus

The House moved quickly to vote yes on a bill to tax big employee bonuses given by companies who have taken substantial amounts of TARP money. The bill would impose a 90% tax on bonuses to highly compensated employees of companies that received more than $5 billion (with a b) in TARP money from the government.

The final vote was 328-93, one of the most bipartisan bills yet to pass the House. At the close, almost as many GOP Reps had voted yes as voted no, a stark contrast from prior bills this season, including the stimulus bill. 243 Democrats and 85 Republicans voted yes, while just 6 Democrats and 87 Republicans voted no.

The measure now moves to the Senate where it faces an admittedly more difficult vote. However, Senators from both sides of the aisle had proposed similar legislation earlier in the week; the Senate version had considered a less painful tax on the employee side with the imposition of a matching tax on the employer side.

I would not be surprised to see a modified version of the bill passed by the end of the month. It’s March madness on a totally different level.

{ 2 comments }

Taxpayer asks: Each year, instead of a Christmas bonus, my employer gives us some pretty nice gifts for the holidays, stuff like iPods and gift cards.  Since it’s a gift, I don’t have to pay taxes on it, right?

Taxgirl says:  Clearly, a holiday bonus of cash is taxable as income.  It’s not really a gift since it’s compensation for services, even if it feels like a gift.  Similarly, most cash equivalent gifts are reportable and/or taxable – that would include gift certificates and yes, gift cards.  They are the same as cash, only in plastic form.

However, a nominal "not cash" gift such as the ubiquitous fruit basket is really just that, a gift and is not taxable.  So, employers, give your employees a perk (and something to remember) and go shopping!

{ 0 comments }