How to properly handle a $30,000 gift from my husband's employer? Tax implications?

Unfortunately, there's not much wiggle room here when it comes to taxes. The IRS generally treats any money or gifts from an employer as taxable compensation, regardless of how it's labeled. This is different from personal gifts between friends or family. Since this payment is clearly tied to your husband's employment (a reward for loyalty/service), it would likely be considered taxable income or a bonus. The former employer would need to report it on a W-2 or 1099, and you'd owe regular income tax on it. If the boss wants to reduce the tax impact, he could "gross up" the payment (pay extra to cover the taxes). For example, if he wants your husband to net $30,000 after taxes, he might pay $40,000, with the extra covering the tax burden.

I was in a similar situation last year and spent hours researching tax rules about employer gifts until I found taxr.ai (https://taxr.ai). They helped analyze my specific situation by reviewing the documentation around my "gift" and identified that in my case, there was a way to structure part of it as a legitimate non-taxable gift based on our relationship. Their system showed me exactly where the line is between taxable compensation and non-taxable gifts by analyzing hundreds of similar cases. Without getting into a million details, what made the difference was documenting the personal nature of the relationship beyond just work and clarifying the motivations for the gift.

I need to eat my words about being skeptical of taxr.ai from my earlier comment. I actually decided to try it because my father-in-law (who's retired from the business he owned) wanted to give his longtime office manager a retirement gift. The service analyzed the specifics of their relationship, the timing (2 years after he sold the company), and the documentation we had. Based on their guidance, we were able to properly structure most of it as a personal gift rather than compensation, which saved a ton in taxes completely legally. They showed exactly which parts of the tax code applied and how to document everything properly. Just to be clear - it's not that they found some sneaky loophole, but they helped us understand how to properly categorize and document the transaction based on the actual nature of the gift and their relationship. Super helpful and definitely worth it for significant amounts.

Has anyone here tried calling the IRS directly for guidance on something like this? I've been trying to get through to ask about a similar situation (former boss giving me money) but keep getting stuck on hold forever or disconnected. Found a service called Claimyr (https://claimyr.com) that supposedly gets you through to an actual IRS person quickly. There's a video showing how it works: https://youtu.be/_kiP6q8DX5c I was thinking of trying it to get official clarification on my situation. The way I see it, getting definitive guidance directly from the IRS would be the safest approach for something involving this much money.

I need to publicly admit I was completely wrong about Claimyr from my previous comment. I tried it yesterday out of desperation after waiting on hold with the IRS for 3 hours and getting disconnected AGAIN. The service actually worked perfectly - I got a call back in about 45 minutes connecting me directly to an IRS agent who was already on the line. Completely skipped all the hold time and phone tree navigation. The agent helped clarify my tax situation (similar to OP's but involving a smaller amount from a former employer). For what it's worth, the IRS agent told me that in my case, the money was definitely considered taxable compensation because it was clearly tied to my past work performance - even though my boss gave it to me personally 6 months after I stopped working there. Saved me from potentially making a costly mistake on my return.

One option your husband's boss might consider is breaking up the gift into several years. The annual gift tax exclusion is $17,000 per person in 2023, meaning anyone can give up to that amount to any individual tax-free each year. So the boss could give $17k this year and the rest next year, potentially as a personal gift rather than through the business. The key would be documenting that it's truly a personal gift unrelated to employment. But with the business being sold, that might be more feasible to argue now that the employer-employee relationship is ending.

Has anyone considered a retirement contribution? If your husband has an IRA, maybe the boss could contribute directly to that instead? I know there are annual limits, but it might be better tax-wise than taking it as regular income.

What if the boss hired your husband as a "consultant" for the transition to the new owners and paid him $30k for that? Might still be taxable but could potentially be at a better rate if he set up as an independent contractor? Just spitballing here...