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Bonus checks from a customer?

david n

Active member
So yesterday I open an envelope that is hand written by my customer and inside is a check written to me personally(not the biz) as a thank you for my years of service. The enclosed letter stated there will be monthly bonus checks from here on out:).......................I need to talk to my accountant of the tax implications...................but since it's personal to personal it will more than likely be viewed as a gift rather than income. And if the gift threshold of $10k hasn't changed, I should be fine...................anyone else have their customers gift them bonuses?
 

Booze Daily

Active member
One of my customers I do small jobs for beer. One year I did a bunch of small jobs and they must have felt beer wasn't enough, so they wrote me a personal check for $500.
 

BoxcarPete

Active member
So yesterday I open an envelope that is hand written by my customer and inside is a check written to me personally(not the biz) as a thank you for my years of service. The enclosed letter stated there will be monthly bonus checks from here on out:).......................I need to talk to my accountant of the tax implications...................but since it's personal to personal it will more than likely be viewed as a gift rather than income. And if the gift threshold of $10k hasn't changed, I should be fine...................anyone else have their customers gift them bonuses?

It's up to $15k now per person per year.

Haven't heard of personal gifts being given out like that before, at least not straight cash, but enjoy it because you must have earned it!
 

Mcgyver

Active member
wow. If feel like there has to be more to this. Is it just done between business owners to avoid tax? It might be ok if its the two principals behind two small business, but directed to an employee, the conflict of interest potential is huge. I can imagine scenarios where it would be just a bad as a vendor giving customers staff money which, um, is called a bribe. People get fired for that and can be charged criminally
 

gregormarwick

Active member
It's illegal in this country, technically at least.

Used to be a common practice to go around your customers and your vendors and give out bottles of whiskey and the like at christmas, pretty much non-existent now because of the changes in the law.

Although even if that were not the case, I think I'd be a little suspicious if I received a monetary gift from a customer out of the blue...
 

david n

Active member
I haven't talked about it with him yet, but I want to make sure everything is on the up & up..............I've done work for this customer for 18 yrs and know him quite well..................he's a great upstanding guy. Humble, gracious, and benevolent are three words I'd use to describe him.....................
 

johfoster

Member
as a thank you for my years of service

Sounds like income received in exchange for services. If the IRS is cool with that as a gift, I will start making sure to receive $15k in gifts from all my customers annually for being there buddy haha. (and heck I will even give them a $15k discount annually because they are pretty cool too)
 

yoke

Member
This could be a case of a wealthy man who has more than he needs and sees you as a deserving recipient.

I would be gracious in accepting it and thankful when you see him. I wouldn't take it as a sign to raise your price but certainly take it as a compliment.
 

david n

Active member
Got some info................He can give me the bonus or gift but I need to claim it as income....................(which is what I was thinkin' in the first place.............)
 
Congratulations!, you lucky SOB. I can't believe those here looking a gift horse in the mouth. I think their thought process is backward. A CUSTOMER gave him a gift, it wasn't like the OP just sent a purchasing agent from ACME Corp a nice check.
 

metal-ica

New member
Congratulations...it's nice to be recognized once in a while. I'm sure you've probably stayed some late nights to get his work done and most of the time that doesn't get recognized.
 

metalmadness

New member
wow. If feel like there has to be more to this. Is it just done between business owners to avoid tax? It might be ok if its the two principals behind two small business, but directed to an employee, the conflict of interest potential is huge. I can imagine scenarios where it would be just a bad as a vendor giving customers staff money which, um, is called a bribe. People get fired for that and can be charged criminally


I would feel like that has to be reported as INCOME. This is not a gift. Anyone can rag on me for stating the obvious and you might not like it but it is the factual truth.
 

JCByrd24

Member
metalmadness is correct a bonus is income to the IRS, not a gift, as your accountant advised. Most companies will tax the bonus for you just like your income if they give you a bonus.

A bonus from an outside company isn't the same and as others have said may have other implications. This could be a violation of your company policy. From your employers standpoint this is a gift, and very likely exceeds any threshold that may apply to gifts allowed to be received, especially if coming in monthly. For employees of the federal government anything over $20 of value (regardless of cost to the giver) is a no-no unless it's special case (Congress seems to play by their own rules).

A small machine shop may not care at all or at least have no policy in place for such a thing, but a larger shop with real HR etc. likely will have policies about this. Check with them, or do your own research on their policies.
 
metalmadness is correct a bonus is income to the IRS, not a gift, as your accountant advised. Most companies will tax the bonus for you just like your income if they give you a bonus.

A bonus from an outside company isn't the same and as others have said may have other implications. This could be a violation of your company policy. From your employers standpoint this is a gift, and very likely exceeds any threshold that may apply to gifts allowed to be received, especially if coming in monthly. For employees of the federal government anything over $20 of value (regardless of cost to the giver) is a no-no unless it's special case (Congress seems to play by their own rules).

A small machine shop may not care at all or at least have no policy in place for such a thing, but a larger shop with real HR etc. likely will have policies about this. Check with them, or do your own research on their policies.


What's your point? Your reply does not apply in the least here. Unless my reading comprehension is way off this was a business owner to a business owner transaction, obviously the OP owns a small business, possibly like wise for the guy who wrote him the check.
 








 
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