✨ Pricing; Costs; Finances

Like Peter Rotch's CCRC, mine is clear that these holiday gifts are gifts, not tips even though sometimes explained as analogous to tipping in the "outside" world. Our Resident Council conducts the annual campaign with "suggested" levels for each household and utilizes the services of our Accounting Department to cut the checks. Nothing is withheld for FICA or state and Federal taxes. Residents are aware that these gifts are not tax deductible. The amount is determined based on hours worked. Check distribution is a festive midday holiday party attended by residents and the employees.

It is essential that the funds collected are completely separate from the organization’s funds. I think that these gifts should be identified as gifts (from residents directly to the staff). The discussion about being tips is misleading. The no- tip policy drives the gift program but they are gifts, not tips. At RiverMead, the Residents’ Council has a separate bank account solely for the gift program, collects funds directly from Residents and disburses by check directly to staff. Also residents are advised that this gift is not tax deductible.

We distribute funds in amounts calculated by the hours worked without regard to seniority or earnings. Our approach is that employees are rewarded for performance by their salary and the holiday gift program is to thank them for their contributions. This also assures that employees who have little or no interaction with residents (think, dishwashers) are recognized for their contributions to the community. It also does not put the Residents’ Council in the position of conducting a separate evaluation for which it is not equipped to do.

In some recent discussions I've had regarding this topic, it has become apparent that there are at least two "versions" of Resident Associations. Some, like the community I reside in, are separate legal entities, with their own Tax ID number, their own bank account, etc. In our case, the Residents' Association is a 501(c)4; I'd guess that is typical.

Some residents associations are, for banking and tax purposes, piggy-backing on the provider with these "gifts" going from the provider's bank account to the employees. It makes a big difference because an employer can not give gifts to employees. The majority of CCRC employees are not in "typically tipped" professions/occupations and if your community has a policy that they can't be tipped it creates a complication even for the ones that might squeak past the occupation test.

If your residents' association is a separate legal entity, take extraordinary measures to ensure this money never gets tainted by the employer and give it as gifts, not tips.

Tips were exempted from income tax until 2028 in the OBBA tax act of 2025. Has NACCRA established whether this exemption applies to voluntary cash gifts made by residents to the staff in their community through their Residents Association? We have a Holiday Fund to show our appreciation to our staff who are not tipped on a daily basis for the services they provide.

The legal situation for exemption seems rather murky: it depends on which industry category the staff's work falls into. It would be useful to get an authoritatative legal opinion on whether and how such annual cash gifts should be administered to allow them to be tax-exempt (at least until 2028) for staff in NACCRA communities.

Medicare and Social Security tax (FICA) does have to be paid. IRS Form 4137 is used to report the income.