Deducting Awards Given to Employees
Qualified Plan Awards
A qualified plan award for length of service or safety achievement includes:
- An established written plan or program
- It does not discriminate in favor of highly compensated employees
- The average annual cost of all awards under the plan to all employees must not exceed $400 (excluding awards of nominal value).
Deduction Limit for Qualified Plan Awards
You may deduct up to $1,600 for all qualified plan awards (length of time and safety) given to the same employee during the year.
The overall $1,600 applies if the same employee receives some qualified plans awards and some non-qualified plan awards.
Non-Qualified Plan Awards
The maximum annual deduction for non-qualified plans awards for each employee is $400.