Employee-Related Expenses

Hiring people to work for your project is exciting! We understand and appreciate that projects want to set their employees up for success.

As always, we kindly ask that you exercise reasonable discretion when making purchases, as nonprofit organizations are responsible for stewarding charitable funds carefully.

Additionally, certain purchases may be taxable to the employee per IRS regulations.

Here, we've listed some common examples of employee-related expenses to guide you in determining how to pay for such purchases and when they may or may not be taxable to the employee. Scroll down further for a quick-view version.

1. Office equipment + Office Supplies

Office equipment required to perform the job (computers/monitors/printers/phones) – it is common for workplaces to purchase necessary equipment for an employee to use during their tenure.

• Typically, this equipment would be owned by SGF/the project and would be returned to the project when the employee leaves their position.

• These purchases are best made through Brex. Your project is responsible for keeping track of project-owned assets.

Office supplies (pens/paper/highlighters/post-its/etc) – it is also common for workplaces to purchase office supplies. The idea is that the employee will use the supplies reasonably and will return any unused/remaining materials upon termination.

• These purchases are best made through Brex. The employee can also make approved purchases and submit receipts for reimbursement.

1. Internet access/phone bills – remote workers can be reimbursed for a reasonable percentage of their phone and/or internet bill if these tools are required to complete their work.

• For example, if your employee works full-time at 40 hours per week, and their telephone bill is $100 per month, it could be reasonable for the project to reimburse up to $25 per month. (There are 168 hours in the week. 168 divided by 40 = 24%)

• As a reimbursement, this is not taxable to your employees. The reimbursement will be applied to each paycheck and processed through ADP.

• Please note: CA employees who work in office and use their phone for work may also be eligible for this reimbursement.

• If you’d like to offer this benefit, please connect with our HR Team at [e-mail].

1. Home office setup – a popular employee benefit is what’s often referred to as a “home office stipend” or “remote work stipend.” Employees may typically use these funds to purchase an ergonomic chair, a new desk, whiteboards, anti-fatigue mats, or other items to set up their home office space.

• This is a taxable benefit to an employee, and these items are then owned by the employee.

• If you’d like to provide this stipend to an onboarding (or existing) employee, it will be processed as additional compensation (and taxed) in ADP.

• Purchases made by the employee with these funds are owned by the employee.

1. Wellness benefits – this could include gym memberships, massages, or other wellness-inspired expenses. We understand that projects are working hard to care for their teams. However, these are taxable expenses per IRS guidelines.

• If you’d like to provide a wellness benefit, you should issue the funds to your employee through payroll as additional compensation to be reported as taxable wages. Please do not make individual employee wellness purchases with a Brex card. If we determine a taxable expense was purchased with a Brex card, we will need to run this total through payroll to calculate both the employer and employee taxes, and the employee will be required to pay the amount that should have been withheld either through a deduction from a future paycheck or another payment platform, if they prefer (Zelle, Venmo, or personal check).

• Important note: fuller team experiences are typically not considered taxable. For example, if you take the fuller team out for an afternoon movie to share a break together, that would not be considered taxable to the individual employee.

• Or, if your team is remote, and you plan for a group meditation session via Zoom, that would not be considered taxable to the individual employee.

• One final example: if you have a shared workspace, and you use funds to renovate a breakroom space, that would not be considered taxable to the individual employee.

1. Gift cards - gift cards are not excludable from income and are taxable, per the IRS.

• We strongly prefer to issue additional compensation or a bonus directly through payroll.

• If a gift card is purchased with project funds, you must notify SGF at [e-mail]. The employer-side of payroll taxes will be charged to the project, and we will notify the employee that applicable taxes will be withheld from their next paycheck.

1. De Minimis Giveaways - the IRS views small, infrequent “gifts” to employees as tax free. This includes project swag (branded mugs, sweatshirts, pens, etc), occasional meals, or physical gifts of modest value (like a gift basket).

• These items are not taxable to the employee.

1. Food/beverages during work hours - team meals can be a wonderful way to celebrate your team and build connections. While an occasional team meal is not considered taxable to the employee, projects should not be covering employees’ daily meals/drinks/snacks whether they are working remotely or in an office.

• If this is a necessary part of the work, this food and beverage “allowance” is considered taxable by the IRS.

• Note: If an employee is traveling out of town for work, daily meals/drinks/snacks are not taxable to the employee. (If your employee is traveling out of town for work, please consult this section of the Handbook.)

1. Professional development (work related education - tuition/fees/books) - professional development opportunities must be directly related to the employee’s work responsibilities.

• Professional development expenses are not considered taxable to the employee unless the annual amount exceeds $5,250.

• These purchases are typically best made through Brex. The employee can also make approved purchases and submit receipts for reimbursement.

• Note: Payment to an independent contractor for such purchases must be made via an Invoice Payment Request Form in the Members Portal, and if the amount is $2000+ in a calendar year, requires a contract. Payments to contractors cannot be reimbursed.

If you have any questions, please connect with us at [e-mail] and [e-mail].

Employee Related Expense (with examples)	Taxable to the employee?	Payment method	Notes
Office Equipment (Computer/Monitor/Printer)	No	Brex (receipts required)	SGF owns the equipment, and it must be returned to the project when employment ends
Office Supplies (Pens/Paper/Stapler)	No	Brex or Employee may purchase out of pocket and submit receipts for reimbursement	Unused supplies to be returned to project when employment ends
Internet/Phone Service Recurring Costs for Remote Workers	No	Employee pays out of pocket and is reimbursed a reasonable percentage of their bill via bi-weekly payroll	Project must be able to present copies of employee’s bills/receipts in the event of an audit
Home Office Setup Stipend (Chair/Desk/Lamp/Plants)	Yes	Payroll - Additional Compensation	Employee owns purchases No need to submit receipts
De Minimis Giveaways (Project Swag - Branded Mugs/Clothing/Pens, Occasional Meals, Gift Baskets)	No	Brex (receipts required)	The IRS considers small, infrequent “gifts” to employees as tax free.
Individual Employee Wellness (Massage/Fitbit/ Gym Membership)	Yes	Payroll - Additional Compensation	Employee owns purchases No need to submit receipts
Team Wellness/Team Building (Group Meal or Bonding Activity)	No	Brex (receipts required)
Gift Cards (The Same as Cash!)	Yes	Brex (receipts required)	You must notify SGF when a gift card is issued to an employee, so we may report the gross amount as wages and withhold taxes.
Food & Beverages While Travelling for Work	No	Brex (receipts required) or Employee may purchase out of pocket and submit receipts for reimbursement
Food & Beverage Other (Not During Work Travel or Group/Team Meal)	Yes	Payroll - Additional Compensation	Projects should not be covering daily food/beverages
Professional Development (Work Related Education - Tuition/Fees/Books)	No, unless annual amount exceeds $5,250	Brex or Employee may purchase out of pocket and submit receipts for reimbursement unless you are paying an independent contractor. All independent contractor payments must be submitted through the Invoice Payment Request Form. (Payments to contractors cannot be reimbursed.)	Professional development must be directly related to the employee’s work responsibilities.