Ace the Certified Payroll Pro Test 2025 – Payroll Masters, Your Time to Shine!

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What rule applies to De Minims fringe benefits such as holiday gifts and occasional meals?

They are fully taxable

They are deductible after tax

They are non-taxable

De Minimis fringe benefits such as holiday gifts and occasional meals are considered non-taxable. This means that these types of benefits are so small or infrequent that it would be impractical for employers to account for them, and therefore the IRS does not require them to be reported as taxable income for employees. This rule makes it easier for employers to provide small perks to their employees without the burden of additional tax reporting requirements.

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They are taxable if exceeding a certain threshold

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