A couple of weeks ago I wrote about employers providing gifts to employees. You can read about it here http://www.nococpas.com/blog/my-boss-gave-me-a-turkey-whats-up-with-that but the important thing to remember is you cannot “give” your employee $500. You can only give them $25 in cash which would make you look like a real cheapskate. In order to give them a gift of cash you will need to give them a “bonus” and include it in their paycheck or create a separate paycheck for just the bonus amount. Either way it is important to note that bonuses are subject to 25% federal withholding in most cases so make sure your software knows that you are issuing a bonus so that the 25% withholding is calculated correctly instead of the normal amount that is withheld based on your employees W4.