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De Minimis



The term de minimis is generally used to describe something that is too small or insignificant to be considered, something unimportant; the term comes from a Latin phrase, "de minimis non curat lex," the law does not deal with trivial matters. From a tax standpoint, a de minimis is a small amount not subject to taxation. The IRS says a de minimis fringe is "small in value compared to the amount of total compensation."

De Minimis Award examples
The IRS provides some examples of de minimis awards which can be excluded from taxes for employees:

  • Holiday turkeys or hams
  • Flowers, plaques, or coffee mugs for special occasions
  • A gold watch on retirement
  • Parking for an employee of the month, if the amount doesn't exceed certain limits.
  • Occasional award dinners or holiday dinners also fall within the definition of de minimis benefits.

The IRS does not provide a specific example of a de minimis cash award. In one instance, an award of $100 was not considered de minimis.

In another example, on Form 1099-S, Proceeds from Real Estate Transactions, a transfer of less than $600 is considered de minimis.

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