Our company has put together a wellness program. Our health insurance company has given us $XX to be used towards employee wellness programs. We have offered workout and exercise challenges to employees and giveaways for the participants and the winners. Someone in our wellness committee has suggested giving gift cards. What are the tax implications of the gift cards for the employer and employee? I heard that gift cards or cash for health related reasons is not taxable? How are items bought and paid by the company for giving to employees as gifts booked and treated?

If we allow employees to spend $100 dollars to purchase something of their choice and then get reimbursed through an expense report, will this have any hidden tax implications and also what expense account should this be booked to? I am assuming the employee will not have to report this in their income taxes?