Taxability of Prizes and Awards

- Accounts payable managers must be careful when their companies award gifts or prizes designed to motivate staff members or demonstrate appreciation. The unexpected “benefit” you bestow may turn out to be a tax nightmare for the employee. What the IRS Says According to the Internal Revenue Code (IRC) 74; IRC 3121 (a)(20), the value of any award or prize given by an employer is taxable to an employee as wages, included in the employee’s Form W-2, Wage and Tax Statement, and is subject to…