Has your employer given you a gift card, cash or tickets to the theater? These perks, known as fringe benefits, may be extra compensation that’s taxable to you.
Generally, your employer must include the dollar amount of fringe benefits such as gift cards or cash, in your gross income. The benefits are subject to social security, Medicare, and federal and state income tax withholding, unless there’s a specific exclusion.
What’s excluded? Small or “de minimis” fringe benefits are typically not taxable when the amount is insignificant and the benefit is infrequently given. The occasional bouquet of flowers or box of donuts are examples. Another specifically excluded, tax-free-to-you perk is a cell phone provided by your employer for business use.
Some fringe benefits do not fall neatly into either category. For example, tickets to the theater or to sporting events are not taxable when given occasionally, or when of minimal value. Season tickets, on the other hand, might be taxable to you.