What about Santa’s taxes?     Here’s a few things I bet you haven’t thought about before.

1.  Given that Santa travels about 75 and a half million miles a year (mostly on December 24th) his mileage deduction (at 54.5 cents per mile in 2018) is $41,147,500.

 

2.  Reindeer are depreciated over a period of 7 years.

 

3.  North Pole elves are considered employees and receive W-2s.   Elves outside of the North Pole are considered contract labor and receive 1099s.   (There are people who work as “elves” outside the North Pole that work for other organizations–like at the mall, who receive W2s, but they are not real elves and are not employed by Santa himself.)

 

4.  Because the elves live at the North Pole for the convenience of their employer, and since living at the North Pole is a condition of employment, elf lodging is not taxable to the elves.

 

5.  Santa doesn’t actually make any money from his toy distribution operation.  Most of Santa’s income comes from royalties from his guest appearances in movies, books, and television commercials.

 

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Footnotes:

1.  Santa’s distance traveled:  The Physics of Santa,  http://www.daclarke.org/Humour/santa.html

 

2.  Reindeer depreciation:  IRS publication 225 Farmer’s Tax Guide

 

3.  Elves are employees:  Common Law Rules of employment, http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

 

4.  Elf housing:  IRS publication 15B  Employer’s Tax Guide to Fringe Benefits

 

5.  Santa’s income from royalties:   https://en.wikipedia.org/wiki/Royalty_payment