Year end bonuses?

[Jean Shimp]

What's typical for employee year end or Christmas bonuses? We have a small shop and am wondering what other employers do at this time of year. Also, I'm creating an employee handbook and am on the "paid time off" section - any advice on that too? Thanks.

 

[Gino]

We try to give each employee, equal to a week's wages, but in cash, so no taxes are paid out on this gift.

 

[gabagoo]

We try to give each employee, equal to a week's wages, but in cash, so no taxes are paid out on this gift.

How do you do that?

 

[reQ]

How do you do that?

I am pretty sure there are some loops in system to do so, like "unaccounted" spendings etc. Just can't abuse it to much.

 

[Gino]

How do you do that?

We give the employee a cash bonus. THEY don't hafta pay any taxes on it, as no one knows it took place. For a Christmas bonus, it doesn't go on the books. We don't use it as a write-off.

 

[CanuckSigns]

We give the employee a cash bonus. THEY don't hafta pay any taxes on it, as no one knows it took place.

I'm shocked that someone who is so "by the books" as you come off as being would be so nonchalant about committing tax evasion...

 

[HDvinyl]

 

[reQ]

I'm shocked that someone who is so "by the books" as you come off as being would be so nonchalant about committing tax evasion...

I think he end up paying taxes on it since he does not write it off as an expense, so yeah, government still get their portion, only employee does not pay a dime

 

[Gino]

I think he end up paying taxes on it since he does not write it off as an expense, so yeah, government still get their portion, only employee does not pay a dime

Finally someone understands.

Why is it, all the naysayers just wanna see blood ?? They don't stop to think, they just wanna b!tch about anything and everything...........................

MERRY CHRISTMAS​

 

[CanuckSigns]

I think he end up paying taxes on it since he does not write it off as an expense, so yeah, government still get their portion, only employee does not pay a dime

I'm not sure how it works in the states, but where i'm from it would be classified as income for the employee, and the employee must claim it on their tax return, regardless of if it was claimed as an expense by the employer or not. I'm not saying it's not common practice or even that i've never done it, but I was just pointing out how I found it odd that Gino, who is always by the book on here (Do you have the proper insurance for that, are you qualified etc.) would be so bold as to mention this on a public forum.

 

[reQ]

I'm not sure how it works in the states, but where i'm from it would be classified as income for the employee, and the employee must claim it on their tax return, regardless of if it was claimed as an expense by the employer or not. I'm not saying it's not common practice or even that i've never done it, but I was just pointing out how I found it odd that Gino, who is always by the book on here (Do you have the proper insurance for that, are you qualified etc.) would be so bold as to mention this on a public forum.

The way i see it, that money that he gives to employees by cash or cheque, does not matter, he leaves it off the books as an expense. So lets say he gives out $5000 in bonuses tax free, that $5000, he will have to pay income tax on, since he gave them to employee as tax free. So he pays income tax on $5000 because he did not write it off. Its legal anywhere, government does not care, its completely legal. Would be illegal if he would not pay income tax on that $5000

P.S. its up to employee to claim it or not in "other income" section on T4. Gino is left out of it, since he pays his income tax on the amount he gives out.

 

[Gino]

I'm not sure how it works in the states, but where i'm from it would be classified as income for the employee, and the employee must claim it on their tax return, regardless of if it was claimed as an expense by the employer or not. I'm not saying it's not common practice or even that i've never done it, but I was just pointing out how I found it odd that Gino, who is always by the book on here (Do you have the proper insurance for that, are you qualified etc.) would be so bold as to mention this on a public forum.

It's called...... the Christmas Spirit.

I don't know how it's handled up there, but I'm sure you know exactly what I'm saying. I guess you just wanna fuggup a thread for this OP, so here goes.

As I mentioned, the employee is handed an envelope of cash and is told to do with it what they want. We generally say Merry Christmas, when we hand them out. It goes into our casual labor costs for us and according to the individual's normal paycheck, does not go against their payroll.

Being by the book does not mean, you don't do certain things. I guess it was wrong to suggest this to the OP, by your standards, so just keep your trap shut and we'll ALL be happy.

 

[reQ]

It goes into our casual labor costs for us and according to the individual's normal paycheck, does not go against their payroll.

We have same stuff here in Canada. My mom & step dad are using it to write of actual casual labor for their winery & bistro (paying school kids to do the yard work etc.)

 

[GregT]

We do the same thing here Gino. Happy employees are a great asset to customers....

 

[Billct2]

Eight Tips to Determine if Your Gift is Taxable

 

[Gino]

Eight Tips to Determine if Your Gift is Taxable

Excellent. ​

 

[Jean Shimp]

Thanks for your reply Gino. A weeks wages sounds generous to me.

 

[mfatty500]

Cash is King..

 

[TopFliteGraphics]

One company I worked for had a pretty good formula that was 10% of a week's pay for each month that you worked the prior year. basically, if you worked there 5 months, you got 50% of a week's pay. One year equaled 120% of a week's pay. Now that I have (1) employee, i think I am going to do the same thing for him...Hopefully, next year, I will have more employees to give bonuses to

 

[Gino]

Thanks for your reply Gino. A weeks wages sounds generous to me.

It is generous in my opinion. What you wanna figure out is how valuable and cooperative this person/persons is/are. We have one guy who comes in generally 15 minutes before he starts, just to get his things in order. I have another one who comes in just in the nick of time and sometimes late. Never dock him, but that's taken into consideration. Another one will stay beyond 5 o'clock and not show it on his time sheet and another who leaves at the stroke of 5. Another one is constantly leaving for all kinds of reasons from kid problems to doctor appointments and other run of the mill problems. However, she is no longer with us, she moved to Pittsburgh, so I'm not even sure she's gonna get a bonus. It doesn't always play out this way, but we try, the best we can.