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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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How much tax do I have to pay on a gift of 11K to each of my

Customer Question

How much tax do I have to pay on a gift of 11K to each of my two children:
Submitted: 5 years ago.
Category: Tax
Expert:  RD replied 5 years ago.

There is no gift tax on gift upto $12K per person.

 

Customer: replied 5 years ago.

Am I correct in understanding that I pay no taxes on the 22K that my Subchapter S will be giving as a gift to my two children and they will not have to pay taxes on it either?

Expert:  RD replied 5 years ago.

Gift from S Corp will be considered as a distribution from you(presuming you own it 100%) and gift from you to them. S Corp will not get any deduction or tax benefit from this gift.

 

Also, the two children will not pay any taxes on the gift. There is no tax on the recipient of the gift.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Customer: replied 5 years ago.
Are Performance Awards and Achievement Award valid tax deductions that a Subchapter S can give to its employees in gift cards?
Expert:  RD replied 5 years ago.

Yes, S corporation can give those but these will be included as wages for the employees as discussed below--

 

There are two types of employee achievement award plans, tax qualified and non tax qualified. A tax qualified employee achievement award plan is an established written plan that does not discriminate or favor highly compensated employees. A tax qualified employee achievement award plan can deduct up to $1,600 for all employee achievement awards to the same employee on it's tax return during a taxable year. The average cost of all employee achievement awards during the tax year for all employees cannot exceed $400.

For a non tax qualified employee achievement award plans the tax deduction limit on the employer's tax return is $400 for each employee.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

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