Jhe end of the year brings with it a wave of celebrations, Christmas being the season of gifts. As we prepare for the holiday season, so many United States– based employees claim their holiday bonuses before the holiday tide.
One of the constant dilemmas presented to business owners every year is what would be the appropriate amount to give to their hard-working employees.
While some business owners give cash bonuses to their employees, others offer bonuses in the form of gift cards or other non-cash means to show their employees gratitude.
What is a year-end bonus?
A vacation bonus is usually a gift that expresses gratitude for an employee’s efforts over a period of time, usually a year.
Certain factors such as years of service, base salary and employee performance are taken into account when determining bonuses. The type of bonus can also range from a personalized gift, monetary reward, or even paid time off.
Companies are also urged to avoid bonuses for all employees to promote morale within an organization. Companies should also incorporate these bonuses into their annual budgets.
Performance based bonus
Another type of bonus that one could give to one’s workers is a performance-based bonus. Unlike vacation bonuses, a performance-based bonus need not be flat and is tied to an individual’s performance. These bonuses should also be awarded separately from the holiday bonus.
Tax implications
It is important to note that any monetary bonus awarded to an employee must be reported on the employee’s W-2 form as taxable income.
Moreover, offering a worker paid by the hour paid leave has the same consequences as if the individual in question was still doing his job. This means that their salary, even during their free time, is declarable and taxable.