Go On! Throw an Office Party this Year!
It’s office party season and according to all metrics, we’re all boozing it up in 2016. According to a recent article in Forbes, 80% of companies are planning to host a Christmas party and many are planning on spending more this year than last.
Generally the cost of the party and associated expenses are deductible by the employer and not included as income to the employee. However, keep in mind that some gifts are taxable. Gift cards of under $25 or a basket of treats will usually pass muster, but a big screen TV will likely be considered a taxable gift. If the party is particularly lavish, (I.e. held in Hawaii over Christmas and New Years) it will lose its ability to deduct. According to the IRS, you can have fancy, but not lavish.
Comment: For many employees a Christmas party can add a large bonus to their benefits. A family of four can easily spend $40 on a meal at chain restaurants such as Cracker Barrel or Applebee’s and that is with money that has already been taxed. A free meal to an employee and their families at a nice restaurant can be the difference between hot dogs at home or a nice meal eating what they want for free. Although employers can mandate attendance, let’s remember it’s the Holidays and time to celebrate another year on the books.