Will we have to pay payroll taxes on Rewards?

As with any tax matter, you should consult with a tax expert to determine if a reward someone gets is subject to payroll taxes. 

For companies with US employees, it's likely you'll need to pay payroll taxes if the reward is monetary and could be viewed as compensation by the Internal Revenue Service. Individual rewards like gift cards are a good example of a reward that is subject to payroll taxes.

If you are doing monetary rewards for people, you can export all your redemption data at year-end to calculate the total value of rewards someone received. Typically, that's handed off to your accounting team so they can calculate and pay the taxes owed.

What you don't want to do is dock someone's pay for the amount of taxes owed on rewards. The best practice is to gross up taxes owed, so the employee isn't on the hook for additional taxes.

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