Can my employer tax me on incentives?

Question

My employer offers raffle tickets for hitting my daily conversion rates and on the end of the month the tickets are drawn for items ranging from $15 gift cards to $700 dollar TVs. On recieving your next paycheck if you won an item the tax will be automaticly deducted from your check. Now as it is my understanding incentives from employers are 100% tax deductable. So if they dont have to pay they taxes why should I? Can they,should they and if they arent who do I contact about this?

I dont know if this makes any difference but the state is massachusetts and they charged my co-worker 40% on a $800 dollar tv that seems a little high for even tax-achusetts

Answer 1

It's the government that taxes you on them, not your employer.

Your employer gets to deduct your compensation. This is compensation. It's a fun gamelike one, but it's compensation.

Compensation is taxable to the employee.

You would contact the Internal Revenue Service to complain, who in turn would refer you to Congress...writers of the Internal Revenue Code.

Answer 2

They not only can, but are required to.

The incentives are tax deductible for the employer just like your wages are - because they don't get to keep the money - you get the wages, so you're the one that pays taxes on them. They are taxable to you because you ended up with them so it's income to you.

Answer 3

The employer can deduct it so YOU have to pay tax on it. Same thing with your pay. The employer deducts it as a business expense and YOU pay taxes on it.

Answer 4

Your employer is not taxing you, the government is.

Incentives are the same as a bonus and taxable.

Answer 5

items under $25 shouldn't be taxed, but over $25 it's probably allowed - and required by the irs