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  • 1.  Taxation for Gifting a Vehicle

    This message was posted by a user wishing to remain anonymous
    Posted 04-18-2024 11:58
    This message was posted by a user wishing to remain anonymous

    Good morning,

    I tried Google but all responses take me to gift card taxation :/

    We are paying severance to a (previous) employee who was also gifted their company vehicle ($25,500 value). I know I need to include this for tax purposes, so the value is included in their W2 wages, however, I'm not sure of the correct taxation. To note, this is a Pennsylvania based employee.

    I know I need to add a 'prepaid' earning code so only the value is taxed, and the employee does not receive the actual dollar amount, but not sure what taxation applies. Would this be all taxes; SS, Med, Fed, State & PA Local?

    Is someone able to point me in the right direction or suggest where I can find documentation?

    Thanks in advance.



  • 2.  RE: Taxation for Gifting a Vehicle

    Posted 05-14-2024 09:40

    Hey Buddy,

    I would like to provide a short solution for gifting a vehicle to an employee as part of their severance, you'll include the vehicle's value ($25,500) in their W2 wages using a "prepaid" earning code.

    The taxation will typically cover all applicable taxes: Social Security (SS), Medicare (Med), Federal income tax (Fed), State income tax, and any local taxes specific to Pennsylvania (PA Local). You can find detailed documentation on this process from the IRS or consult with a tax professional for precise guidance.

    Thanks,

    Steve


    Original Message


  • 3.  RE: Taxation for Gifting a Vehicle

    Posted 08-19-2024 15:21

    The vehicle's value should be taxed like regular wages, including Social Security, Medicare, Federal, State, and Local taxes. For specifics, check IRS guidelines on supplemental wages and Pennsylvania tax rules. Consulting a tax professional can also be helpful.


    Original Message


  • 4.  RE: Taxation for Gifting a Vehicle

    Posted 08-20-2024 12:58

    Good morning,

    Yes, the vehicle's value ($25,500) should be included in the W-2 wages and is subject to all standard taxes: SS, Medicare, Federal, State, and PA Local. For specifics, check IRS Publication 15 and Pennsylvania's tax guidelines.


    Original Message