[Shel_178]

Hi everyone! I recently finished taking the CPA exam and passed 3 of the 4 sections during 2013. The policy where I work is that once you pass a section they give you a $200 “bonus” to cover the cost of taking the exam. I’m pretty sure that the $600 that I received for passing those sections was included in my W-2 income. Is this correct? I spent $800+ having to take all sections (one section twice) and this was IMO an expense reimbursement. Anyone have any experience with this? Any guidance would be greatly appreciated. Thanks in advance!!!

REG - 86
FAR - 80
BEC - 79
AUD - 92...I'm done woohoo!

Licensed CPA since Feb. 2014

[Not a Quitter]

If they are considering it a bonus it is taxable.

FAR- 85 I'm DONE!
BEC- 75
REG- 60,60,75
AUD- 74,74,83

CPAExcel used for BEC, AUD, REG
Exam Matrix used for FAR plus NINJA Blitz, cpareviewforfree and a little CPAExcel

[jlough]

I agree with NotaQuitter— if its considered a bonus, they will tax it. Here's an IRS bulletin on it:

https://www.irs.gov/taxtopics/tc514.html

It is very interesting to me that they consider it a bonus rather than expense reimbursement. My guess is they don't want to put the extra work in to substantiate the expenses?

At my company, they reimbursed me for everything- exam fees (only if exam was passed), exam prep (up to $2000), and license fees. And none of it has been taxed. But I had to submit proof of payment and get it approved by two supervisors.

F- 7/13- 84
R- 10/13- 79
A- 11/13- 99
B- 1/14- 86

Licensed in PA- 3/20/2014

This exam ALMOST defeated me back in 2006-2008, but I came back and WON!

[Lindrobe]

My employer reimbursed me $750 for my review course, but they do not pay for any of my fees. They added the $750 to my W-2 (but grossed me up for the taxes) because they said that becoming a CPA will qualify me for other positions.

FAR 12/3/14, 87
AUD 2/3/14, 90
BEC 4/1/14, 88
REG 5/27/14, 94

Licensed CPA, Indiana

"Successful people do things that unsuccessful people don't want to do"

[Shel_178]

Thanks guys for the info! I think that I'm just going to have to accept that because they classified it as a bonus (even though it's not a bonus) it will be reported as taxable income.

I agree jlough that they probably thought it was easier on their end to call it a bonus…I did have to show them proof that I had passed, but no proof of my cost of taking each section.

REG - 86
FAR - 80
BEC - 79
AUD - 92...I'm done woohoo!

Licensed CPA since Feb. 2014

[ThePhoenix]

Ok so my question is somewhat related to this topic… My employer gave me a few hundred bucks as a reward for passing the exam and that's exactly how he phrased it “reward”… not bonus or reimbursement. I wasn't required to pass the exam and get my license but it was encouraged. The company didn't pay for any of my exam fees or prep materials. Will (and should) this amount be included on my W2?

[Gabe]

My understanding, it was gifted to you and you didn't have to do anything for the money, you should not include it on your W2. That is your employer's responsibility with gift tax, etc

CPA, CFE
CISA- Experience will be completed by August 2016

[Gatorbates]

I disagree with Gabe. ThePhoenix … what is a difference between a “reward” and a “bonus”? Absolutely nothing.

It's taxable, and should go on your W-2.

Licensed Florida CPA:
B: 71, 73, 79
A: 83
R: 78 (expired), 77
F: 74, 74, 80

It's finally freaking over.

[Tncincy]

@phoenix,

Your company will include any wages, gifts, etc that are taxable or income on your w-2. There is nothing for you to do but take the money and run.

Seriously, the gift was really nice of your boss. that couple of hundred dollars cannot even come close to the money spent on materials, exam fees, gas and stress. So happy birthday, holiday and anything else you want to call it. You'll know when you get your w-2.

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Gabe]

@Gator I don't do taxes so forgive my ignorance…bonuses are taxable. Yet, what about cash that is gifted. I know for a fact the receiver is not liable for taxes if no services were performed to get the gift.

That being said, maybe, better safe than sorry…or go ask a tax accountant 🙂

CPA, CFE
CISA- Experience will be completed by August 2016

[hzhao0802]

This is absolutely not a gift. You continue to perform service for the company in order to get this reimbursement. And also, CPA preparation and exam fees are not deductible because a CPA can qualify another high level position than non-CPA.

So the reimbursement is taxable. It is not a gift. If you quit this company and they still provide this reimbursement, this is called a gift.

FAR - 88
REG - 88
AUD - 99
BEC - 87

[mintz25]

It's nice that he is offering this, however you should ask him to give it to you in the form of reimbursement for your exam fees or testing materials. Then it will not be included in your W-2 as income (which of course you have to pay fed/ss/med/state tax on which could eat a good portion of this up!) It shouldn't make a difference to him as he can deduct it either way as a business expense.

CMA, EA

BEC - 78 8/2014 1x
REG - 82 11/2014 1x
AUD - 76 2/2015 1x
FAR - ???

[Gatorbates]

Not knocking you, Gabe … just giving my opinion.

About gifting cash to an employee (the green kind, not the direct deposit kind) … yeah people do it, but it's technically illegal not claim it as income.

And going further … about the “receiver” is not liable for taxes if no services were performed to get their gift … incorrect as well. Case in point: I was on the Who Wants to Be a Millionaire show … got a “free flight” & “free room for 3 nights” so I could be on the show. Two months later, I received a 1099 with my winnings on it, AND the value of the flight and hotel room on it. I got the trip for free, but it's still considered income to me.

Licensed Florida CPA:
B: 71, 73, 79
A: 83
R: 78 (expired), 77
F: 74, 74, 80

It's finally freaking over.

[Gabe]

@Gator good to know!

CPA, CFE
CISA- Experience will be completed by August 2016

[ThePhoenix]

I assume it will be on my W2 but wanted some outside opinions.Thanks for all the feedback!

[NebCPA]

I’ll second the idea that this is not a gift and give some reference.

IRC Code section 102 states that gross income does not include the value of property acquired by gift, bequest, or inheritance. However, Section 102(c)(1) says that employee gifts are excluded from this provision and must be reported in gross income to the employee.

Section 74(c) and Section 132(e) set forth the provisions for excluding employee achievement awards and de minimis fringe benefits. IRS Publication 15-B states the de minimis rules for employer gift giving. In the end, someone must pay taxes. If you employer is deducting the amount as an expense, it will be taxed to you if it doesn’t meet one of the other exclusions.

Overall, it is impossible for an employer to give an employee a “gift,” because the employer receives a benefit from the employee. This is based on the Supreme Court ruling Commissioner v Duberstein which set this precedence. You would be hard pressed to prove this was a gift in the truest sense.

[Author]

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