Gift cards may be taxable in several situations. Gift cards may or may not be taxable depending on a number of variables, including as who gave the gift card, its use, and its value.

Here are some circumstances in which gift cards might be subject to taxes:

• As compensation or a bonus: The value of a gift card you get from your employer as payment for services provided or as a bonus is regarded as taxable income and needs to be disclosed on your W-2 form at the end of the year.
• As a business expense: The value of a gift card given as a promotional item or marketing incentive by a company to a customer or client is regarded as a business expense and may be tax deductible.
• As a prize or award: If you get a gift card as a prize or an award, you have to declare the value of the gift card as taxable income on your tax return.

Remember that the taxability of gift cards can be complicated and can change based on the particular circumstances of the gift. If you have any questions about the tax implications of giving or receiving gift cards in a specific circumstance, it’s always a good idea to speak with a tax specialist or accountant.