Understanding Taxes on Rewards

• Are Assembly rewards taxable?
• Which rewards can have a tax setting?
• How to set a reward’s tax status
• Gross up a taxable reward
• What do employees see?
• Find tax information in your reports
• FAQs

Are Assembly rewards taxable?

Reward taxability depends on your organization’s tax requirements and the type of reward. In general, rewards provided by an employer may be considered taxable income, but exceptions may apply.

Some examples of rewards that may have different tax treatment include:

• De minimis awards (lower value item or service)
• Employee achievement awards
• Charitable donations

Because tax rules can vary, consult your tax professional to determine how your organization should handle rewards.

Reward categories

The following reward categories share one tax setting set at the admin level. You cannot set different tax statuses for individual rewards within these categories:

• Gift cards
• Charities
• Monetary rewards and prepaid cards
• Hotels and travel
• Swag
• Amazon catalogs

For example, if you mark gift cards as taxable, that setting applies to all gift card rewards.

Culture rewards

Culture rewards can be configured individually. You can choose a tax status for each culture reward when you create or edit it, which is necessary due to the wide variance in options for culture rewards.

Discounts

Discounts do not have a tax setting because employees purchase them with their own money rather than redeeming points.

Set a reward’s tax status

You can mark a reward or reward category as Taxable or Non-taxable.

• Taxable: The reward may be subject to applicable tax regulations.

• Non-taxable: The reward is not subject to applicable tax regulations.

By default, tax settings are not set up on your behalf.

To determine tax settings for your organization:

1. Click Recognition in the left navigation in Quantum Workplace
2. Select Administration
3. Click Rewards in the left navigation
4. Select the reward category you want to update. For Culture Rewards, select the individual reward.
5. Choose Taxable or Non-taxable.

When tax settings are first enabled, rewards are not set until an admin goes in and chooses a tax status. New reward programs are also not assigned a tax status automatically.

You must set a tax status for each applicable reward category. For Culture Rewards, you can set the tax status for each individual reward.

Changing a tax setting updates the tax information shown in Assembly reports. It does not process payroll or make payroll adjustments. Any necessary payroll changes will be owned at the organizational level.

Gross up a taxable reward

If a reward is taxable, your organization can choose to cover the tax for the employee. This is called grossing up the reward.

When you mark a reward as taxable, you’ll see a Gross Up option.

• Select Gross Up if your organization will cover the employee’s tax. If selected, employees will not be notified of any associated taxes.
• Leave it unchecked if you intend for the employee to be responsible for the tax. Employees will be notified of the associated taxes before moving forward.

The gross-up status is included in your reports so your payroll team can see which rewards had their taxes covered by your organization.

What do employees see?

What an employee sees depends on the reward’s tax settings.

Tax setting	What the employee sees
Taxable, not grossed up	The employee sees a notice that the reward will be taxed in their next paycheck, then sees the actual withholding on said paycheck.
Taxable, grossed up	The employee does not see a tax notice because your organization is covering the tax.
Non-taxable	The employee does not see a tax notice.

Find tax information in your reports

Tax information is available in both the Order History and Reward History reports.

Look for these columns:

Column	What it shows
Tax Setting	Whether the reward is Taxable, Non-taxable, or Not set
Gross Up	Whether your organization is covering the tax (Yes or No)
Pay Group	The employee’s pay group, when this information is mapped to Assembly

For Reward History, some fields may show N/A when the transaction involves points rather than a specific reward.

Frequently Asked Questions

Can I set a different tax status for individual gift cards or charities?

No. Gift cards, charities, monetary rewards, hotels and travel, swag, and Amazon catalogs each have one tax setting for the entire category.

Only culture rewards can have individual tax settings at the specific reward level.

What does “Not set” mean?

Not set means no tax status has been selected for that reward type. Tax statuses are not assigned by default; an admin must select a tax status for each applicable reward type.

Navigate to Assembly Admin, then click Rewards to choose Taxable or Non-taxable. If the reward already has redemption history, you’ll also be able to choose whether the change applies going forward or retroactively.

Does Assembly withhold or file taxes?

No. Assembly records the tax settings you choose and includes them in your reports. Your organization is responsible for payroll, tax withholding, tax filing, and any necessary payroll adjustments.

Are charitable donations taxable?

Charitable donations may have different tax implications from other rewards. You can set a tax status for the charity category, but you should consult your tax professional to determine the appropriate treatment for your organization.

We have employees based in other countries with different tax requirements. How should I handle this?

Taxes vary dramatically on a global scale. Contact our team to share this feedback and discuss your individual circumstances here.

What should I do if I’m unsure?

If you’re unsure how your organization should handle taxes on rewards:

1. Talk with your HR or finance team.
2. Check your organization’s reward and payroll policies.
3. Consult a tax professional for advice specific to your organization.