Anything of value that you give to an employee is taxable as compensation unless it is specifically excluded by the Internal Revenue Code. Taxable items include personal use of company vehicles, bonuses, most gifts, trips, use of company equipment or services, and payment of personal expenses. For items to be excluded, in most cases, a written plan is required.
Some de minimis exceptions include:
√ Annual Christmas gift of less than $25 value; cannot be in cash, cash is always taxable.
√ Benefits which can be provided at no additional cost to the employer. For example, telephone services provided free or at a reduced rate to employees working in that line of business.
√ Benefits which are so small that it is impractical to account for. An example is the employee use of the company copy machine to make copies of a personal legal document.