The US is the only nation that taxes its citizens when they work outside of the country.

If it's YOUR personal money and you pay him in cash, you can call it a loan and as long as there's no paperwork, how would anyone know? Or, you could call it a payroll advance and not collect or deduct it on a check.

That would be a gift tax situation. You can give up to $14k per donee (the gift-receiver) before the gift becomes taxable. And if you have a spouse, he/she can also gift $14k. That means a couple can gift up to $28k/year. That covers most situations.

It becomes sticky when you gift your employees money. You should check with your accountant to ensure that the IRS will not (re)classify the gift as wages. Then it would be double taxed.

Fairly sure you can only gift money to a family member tax free up to the $14k mark. Gifting any money to anyone else would be taxed.

It's not limited to family.


Additional information here: [Link: online.wsj.com]

The other thing I forgot is that there is a lifetime $5.34mil per person exclusion limit. If your estate is large, you are limited to giving away $5.34mil to each donee during your lifetime. I'm guessing that isn't going to be an issue here.

W-w-w-what the heck is a Bonus? 8>( Companies still give those out?

The kind that tries to write off a Lamborghini, Viper, and Porsche.

Maybe this guy is different but I had a client that spent all kinds of money and I worked on his $5Mill home. Long story, but a few years later I was there getting things working to sell and he had worked out a deal with my boss to hold all billings until the house sold because he could not afford to pay us.

Another story, a friend of mine worked at a company and one day the IRS showed up with semi trucks and hauled everything away. 90 year old family owned 4th generation business. Not sure what they did but they were shut down. One day my friend had a job, the next the business was gone.

Here's a well written Legal explanation of the gift tax, and why "Unfortunately, gifts that employers give to their employees are generally treated as supplemental wages, and thus subject to both payroll and income taxes."

[Link: littler.com]

Trying to sidestep taxes in this situation will likely give you an IRS problem. You don't want to mess with the IRS. They have the ability to make your life hell, like no other government agency. What is being called a "gift", is supplemental wages per case law. Treating it any other way is something the IRS is going to be watching for.

Just do not gift it to them as their employer. Gift it to them as just one dude doing another dude a solid. Or leave a wad of cash laying around and when it turns up missing, throw your hands in the air and wave them like you just do not care. :)

If you think you are somehow screwing the IRS out of a few $$, big whoop. If you feel guilty about doing things that others might see as a bit shady, then that is on you. You do what you need to do, but my feeling is that there are plenty of ways to give your employees an "atta boy" without risking anything. Just use your imagination. :)

As the article indicated, when an employer gives an employee a "gift," it is construed as wages and therefor taxable. The IRS is not the agency to screw with. Just do it right and save yourself the potential pain of an audit. Unless you've kept every receipt for the past three years. Then have at it.

I know a painter with a Ferrari and about the most jaw dropping home I have ever set foot in.

Cocaine……

No, not really, he is the owner of a large commercial painting company.

How about buying AMEX gift cards?

Unless it meets the de minimis standard (under $100) it's the same - cash or equivalent.

Gone are the days when you can give someone a true gift without the gubment sticking their grubby little hands out.........

The one that really gets me is the estate tax...............some dude dies and the family has to give up half......total BS

FREAKING BLOOD SUCKERS.............

What was the reason the settlers left to start this country again?

This is just depressing.

Seriously depressing. I can see mid level money trying to avoid taxes at all costs.

Amazing all these companies can get away with paying zero taxes.