• Sona Wegner, MBA, Founder

Employee gifts in your dental practice: are they taxable income?

Updated: Sep 30, 2020

Thanking your dental practice team with nice gifts and bonuses should be a pleasant and simple process while providing a positive impact in the workplace. But if you want to avoid IRS penalties in an audit, it's important to know that any cash or cash equivalent items provided by you (the employer) and given to an employee must be added to payroll as income with regular payroll taxes taken out.

Items that need to be added to payroll as income include the following:

  • Cash bonuses of any amount, even as small as $10

  • Cash awards of any amount

  • Certificates or awards redeemable for merchandise

  • Gift cards, including ones for cash like VISA of any value

  • Non-cash gifts like jewelry (with some exceptions*)

  • Tickets for entertainment events (with some exceptions*)

*There are exceptions for some non-cash gifts that are very minimal in value ($75-ish or less) and hardly ever given, like a baby shower gift.

To add tangible gifts to payroll, the IRS requires you add it to the employee's payroll as taxable wages at the value purchased (how much it cost to buy).

Although this is a big bummer for employees because they have to be taxed on the gifts you give them, at least the cost of the gift and the employer portion of payroll taxes is a deductible business expense for you.

Use these tips as a guide, but be sure to consult your tax adviser to determine how to handle the employee gifts and bonuses you're giving.

Thank you for reading!

Sona Wegner, MBA


Bookkeeping for Dentists™

Would you like to learn more about your practice financials for free? Click here to Subscribe to our blog for weekly articles that will help you understand your numbers to improve your practice.


Learn from us for free, subscribe to our blog.

If you're not ready to get more freedom with our bookkeeping service, you can still take steps to improving your practice for free by subscribing to our blog. Build your knowledge of the numbers with our weekly blog posts. 

Enter your info below to start learning.

BK4D Logo Icon Transparent Background.pn

Bookkeeping for Dentists™ is lovingly run in Cary, North Carolina.

Click here to read our story and meet our team of dedicated bookkeepers. 

Other Helpful Links
Contact Us

To maintain superior quality in our work, we prefer emails over random phone calls. :)

We hope to empower every practice owner to build a business that provides them freedom, by measuring what matters most.

© 2013-2021 Bookkeeping for Dentists LLC

  • Bookkeeping for Dentists LinkedIn
  • Bookkeeping for Dentists Facebook
Bookkeeping for Dentists Contact Email