Salary and compensation arrangements are confidential. They are affirmed by Human  Resources in conjunction with the Personnel and Finance Team.  

Payments made from Awaken, or items of value given to employees, are considered  compensation subject to federal, state and employment tax withholding, and reporting on  Form W-2, unless a specific exemption applies. Any question concerning the taxability of a  gift, prize or award should be reviewed with Accounting Department prior to processing the  transaction. 

Awaken supports the recognition of outstanding employee contributions through the use of  gifts, prizes and awards. However, all payments made from church funds or items of value  given to employees are considered compensation, and are subject to federal, state and  employment tax withholding and reporting on Form W-2, unless a specific exemption  applies. The taxation of gifts, prizes and awards is summarized below: 

1. Cash and Cash Equivalents 

Cash gifts, prizes or awards, including gift certificates and gift cards (cash equivalents),  are considered supplemental wages and are always reportable as taxable  compensation, regardless of the dollar amount and beginning with the first dollar.  Gifts, prizes or awards of cash and cash equivalents must be processed through  payroll and are subject to federal, state and employment tax withholding. The gift,  prize or award must also be included in the employee’s year-end Form W-2,Wage and  Tax Statement. See Appendix A for additional processing procedures.  

2. Non-cash Valued at $75 or Less 

A gift, prize or award may be considered a de minimis fringe benefit and not taxable  compensation to the employee if: 1) It is a non-cash gift of property such as food,  flowers, clothing, etc.; 2) It is valued at $75 or less; and 3) It is given only on an  occasional basis. Gifts, prizes or awards meeting the de minimis fringe benefit criteria  may be paid or reimbursed through Accounts Payable via the Accounts Payable Check  Request Form.  

3. Non-cash Valued at More than $75 

A non-cash gift, prize or award valued at more than $75 is taxable beginning with the  first dollar and must be processed through payroll. Such gifts, prizes and awards are  reportable as taxable compensation to the employee, subject to appropriate federal,  state and employment tax withholding, and must be included in the employee’s year end Form W-2, Wage and Tax Statement.