Morgan Comments on Tax Implications of Benefit Changes Due to Teleworking

October 23, 2020 SHRM

Partner Belinda Morgan was quoted in a SHRM article, “Avoiding Tax Problems with New Benefits,” about how employers can inadvertently create tax liabilities by offering new benefits to teleworking employees.

Considering how quickly employers needed to respond to the issuance of work-from-home orders at the start of pandemic, Morgan said, it’s “not surprising” that the tax treatment of a particular benefit wasn’t at the top of anyone’s mind at the time. But now that work-from-home arrangements and other workforce changes have become routine, employers may want to consider whether these new benefits are a normal business expense or a “fringe” benefit that could create tax liabilities for both the employer and the employee.

“Small rewards for good performance, such as an employer-branded hat or a similar inexpensive item, will be nontaxable,” she said. “If that reward is payable in the form of a $5 Starbucks gift card, however, it will be taxable,” even if the monetary value of those two gifts is the same.

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