Running a dental practice means your focus is on patient care, not pouring over complex tax codes. It’s easy to fall into a reactive cycle, only thinking about taxes when the deadline looms. This approach often leads to overpaying and missing out on key savings that could be reinvested into your practice. But what if you could shift from a last-minute scramble to a year-round strategy? This article is about building that proactive foundation. We’ll cover the essential strategies that turn tax season into a predictable, manageable part of your business. It all starts with understanding that effective, affordable tax planning for dental practices isn’t a luxury—it’s a necessity for financial health.
Key Takeaways
- Shift from reactive filing to proactive planning: The most significant tax savings come from consistent, year-round financial discipline. By implementing a solid record-keeping system and strategically timing your expenses, you can make tax season a simple confirmation of a year-long strategy.
- Leverage deductions unique to your dental practice: Your biggest expenses are often your greatest tax-saving opportunities. Use Section 179 to immediately write off new equipment, deduct the full cost of continuing education, and explore tax credits to lower your final tax bill.
- Align your business structure with your financial goals: The legal entity you choose, like an S-Corporation, is a critical tool for reducing your tax burden and protecting personal assets. Partnering with a professional ensures your structure is optimized for your current needs and future growth.
Know Your Tax Obligations as a Dentist
Taxes are a fundamental part of running any business, and your dental practice is no exception. Getting a handle on your obligations isn’t just about compliance; it’s about building a financially healthy practice that can thrive for years. When you understand what you owe and why, you can move from a reactive scramble to a proactive strategy. For most dentists, this comes down to three key areas: income tax on your profits, payroll tax for your team, and in some cases, sales tax on products you sell. Let’s break down what each of these means for your practice.
Breaking Down Income Tax
As a practice owner, you’ll face income tax at both the federal and state levels. This applies to your practice’s net income—the profit left after you’ve paid all your expenses. But your responsibility doesn’t stop there. It’s essential to look at the complete picture, which includes proactive business tax planning to reduce your overall liability. This involves more than just filing on time; it means strategically structuring your business, taking advantage of every available deduction and credit, and making smart financial decisions throughout the year. Thinking ahead helps you keep more of your hard-earned money and reinvest it into your practice, your team, and your future.
Handling Payroll Tax
If you have employees—from hygienists and dental assistants to your front-desk staff—you’re responsible for managing payroll taxes. This involves withholding federal and state income taxes, Social Security, and Medicare from their paychecks. On top of that, you as the employer must also pay your own share of these taxes, along with federal and state unemployment taxes. Getting this right is critical, as payroll tax errors can lead to significant penalties and headaches. Setting up a streamlined system from the start helps you avoid these costly pitfalls and ensures your team is paid accurately and on time, keeping morale high and your practice running smoothly.
What About Sales Tax?
Many dentists believe they are completely exempt from sales tax because their services aren’t taxable. While it’s true that procedures like fillings, cleanings, and crowns are generally not subject to sales tax, this isn’t the full story. If your practice sells products like electric toothbrushes, whitening kits, or prescription-grade mouthwash, you may be required to collect and remit sales tax on those items. The rules vary by state and even by city, so it’s important to understand your local obligations. Integrating this process into your regular business accounting ensures you stay compliant and avoid any surprise tax bills down the road.
Smart Tax Planning Strategies for Your Practice
Effective tax planning is about more than just filing on time; it’s about making strategic decisions throughout the year to lower your tax liability. For dental practice owners, this means looking at every aspect of your business, from daily expenses to long-term retirement goals. A proactive approach ensures you keep more of your hard-earned money and reinvest it into your practice, your team, and your future. By implementing a few key strategies, you can turn tax season from a stressful deadline into a predictable part of your financial management. Let’s explore some of the most impactful ways to plan for your taxes.
Maximize Your Deductions
One of the most direct ways to lower your taxable income is by claiming every eligible business deduction. Think beyond the obvious—your deductions include everything from office supplies and uniforms to professional dues and insurance premiums. You can also deduct the cost of new dental equipment through depreciation. Keeping meticulous records is essential here; ensure all business expenses are paid by the practice and properly documented. A solid business accounting system will help you track these expenses accurately, so nothing gets missed. This simple habit ensures you have the proof you need to back up your claims if questions ever arise.
Use Retirement Accounts to Your Advantage
Saving for retirement is a financial goal for everyone, but for practice owners, it’s also a powerful tax-saving tool. By maximizing your contributions to retirement plans like a SIMPLE IRA or 401(k), you directly lower your current tax bill. It’s also wise to regularly assess if your current plan is the best fit for your practice’s financial situation. Don’t forget about Health Savings Accounts (HSAs), which offer a triple tax benefit: your contributions are pre-tax, the funds grow tax-free, and withdrawals for qualified medical expenses are also tax-free. Integrating these accounts into your overall business tax planning is a smart move for both your present and future financial health.
Employ Family Members Strategically
Hiring family members, such as your spouse or children, can be a savvy tax strategy, but it needs to be done correctly. The key is that they must perform legitimate work for the practice at a reasonable wage. For example, you could hire your teenager to manage social media or handle administrative tasks. Their wages can be a deductible business expense for you, and their income might be low enough to be covered by the standard deduction, resulting in little to no tax. If you employ your children under 18, their wages are also typically exempt from FICA taxes. This strategy can help you shift income and reduce your family’s overall tax burden.
Leverage the QBI Deduction
The Qualified Business Income (QBI) deduction is a significant tax break you don’t want to overlook. This provision allows owners of pass-through entities—which includes many dental practices—to deduct up to 20% of their qualified business income. This deduction can substantially lower your taxable income, leaving more money in your pocket. However, there are important limitations and income-based phase-outs to be aware of, which can make the calculation complex. Understanding how the QBI deduction applies to your specific situation is crucial for maximizing its benefits when preparing your individual income tax return.
Key Tax Deductions for Dental Practices
One of the most effective ways to lower your tax bill is by taking every deduction you’re entitled to. For dentists, this goes far beyond just the obvious business expenses. Many practice owners miss out on significant savings simply because they aren’t aware of the full range of deductions available to them. Think of deductions as the tax code’s way of rewarding you for investing in your practice, your skills, and your team. From the high-tech equipment in your operatories to the corner of your home where you manage billing, many of your costs can directly reduce your taxable income.
Understanding these deductions is a cornerstone of smart business tax planning. It’s not just about saving money at year-end; it’s about making strategic financial decisions throughout the year. When you know that a new piece of equipment or a continuing education course comes with a tax benefit, it can influence your purchasing decisions and help you grow your practice more efficiently. The key is to be proactive. Instead of scrambling to find receipts in April, a year-round focus on tracking and categorizing your expenses will ensure you’re prepared to claim everything you’ve earned. Let’s look at some of the most significant and often-overlooked tax deductions for dental practices.
Deduct Equipment and Technology
As a dentist, your equipment is one of your biggest investments, and the tax code offers a great way to get an immediate return. Thanks to Section 179, you can often deduct the full purchase price of qualifying new or used equipment and software in the year you put it into service. This means you don’t have to depreciate the cost over many years. Think about your dental chairs, X-ray machines, sterilization equipment, and even computer systems. By deducting the entire cost upfront, you can significantly lower your taxable income for that year. This is especially helpful when you’re expanding your practice or investing in the latest technology to improve patient care.
Write Off Office Supplies and Operational Costs
Everyday operational costs add up, and they are all deductible business expenses. This includes everything from the basics like gloves, masks, and office stationery to larger costs like staff uniforms, professional liability insurance, and membership dues for dental associations. Don’t forget to track these expenses meticulously. On top of these standard write-offs, you may also be eligible for the Qualified Business Income (QBI) deduction, which allows some business owners to deduct up to 20% of their qualified business income. Proper business accounting and management ensures you have the detailed records needed to claim every dollar you deserve and to accurately calculate deductions like QBI.
Claim Continuing Education and Professional Development
The dental field is always evolving, and the costs of staying current are fully tax-deductible. Any expenses for continuing education courses that maintain or improve your skills as a dentist are a write-off. This includes tuition and fees for seminars, conferences, and workshops, as well as the cost of travel, lodging, and meals associated with attending them. Think of it as an investment in your professional growth that comes with a valuable tax benefit. When you file your individual income tax return, these professional development costs can make a real difference in what you owe, all while you’re becoming a better practitioner for your patients.
Take the Home Office Deduction
If you use a specific area of your home exclusively and regularly for the administrative or management activities of your dental practice, you may qualify for the home office deduction. This is a commonly missed opportunity. The key is that the space must be dedicated solely to your business—a desk in the corner of your family room won’t cut it. If you have a qualifying space, you can deduct a percentage of your home expenses, like mortgage interest, insurance, utilities, and repairs. Since this deduction can sometimes attract IRS scrutiny, it’s wise to have solid records and professional support, especially if you ever need tax notice and audit representation.
Use Tax Credits and Section 179 to Save
Beyond standard deductions, tax credits and special provisions like Section 179 are some of the most powerful tools for lowering your dental practice’s tax bill. It’s important to know the difference: deductions reduce your taxable income, while credits directly reduce the amount of tax you owe, dollar for dollar. A $5,000 credit saves you $5,000 in taxes, making it much more impactful than a $5,000 deduction.
Both federal and state governments offer these incentives to encourage specific business activities, like hiring certain employees or investing in new equipment. Taking advantage of them requires forward-thinking and proactive business tax planning. You can’t claim a credit for something you didn’t know about, so understanding these opportunities ahead of time is key. By aligning your business decisions with available incentives, you can make strategic investments that not only improve your practice but also generate significant tax savings.
Find Employment-Related Tax Credits
As you grow your team, you may be able to claim valuable tax credits for your hiring decisions. Programs like the Work Opportunity Tax Credit (WOTC) provide federal tax credits to employers who hire individuals from certain targeted groups, such as veterans or people who have faced significant barriers to employment. California has its own set of hiring credits that can add even more savings. These programs change over time, with new incentives appearing and old ones expiring. Staying on top of these shifts is essential. A tax professional can help you identify which credits your practice qualifies for and ensure you complete the necessary paperwork to claim them.
Get Incentives for Energy-Efficient Equipment
Upgrading your practice with energy-efficient technology can do more than just lower your utility bills; it can also reduce your tax liability. Federal and state governments often offer tax credits and deductions for purchasing equipment that meets certain energy-saving standards. This could apply to a new HVAC system, updated lighting, or even specific types of medical equipment. Many dental practice owners focus solely on the tax implications of their services and overlook these kinds of opportunities. Good business accounting and management involves looking at the whole picture to find savings in areas you might not expect, turning a necessary upgrade into a smart financial move.
Write Off Purchases Immediately with Section 179
Section 179 is a game-changer for dental practices, which are often capital-intensive businesses. Instead of depreciating major purchases over several years, this tax code provision allows you to deduct the full purchase price of qualifying equipment and software in the year you place it into service. This includes everything from dental chairs and X-ray machines to computers and office furniture. This immediate write-off can dramatically lower your taxable income for the year. Planning your major purchases around this provision can provide a substantial cash flow advantage, but it’s important to understand the annual limits and rules. This is especially useful when investing in new systems, including your accounting software implementation and support.
Manage Your Finances for Better Tax Outcomes
Strong tax planning isn’t a year-end scramble; it’s the result of consistent financial management. As a dental practice owner, your focus is rightly on your patients and team. However, building solid financial habits throughout the year is essential for maximizing profitability and minimizing your tax liability. By creating clear systems for your money, you can make tax season less stressful and more strategic.
Set Up a Solid Record-Keeping System
The foundation of any good tax strategy is meticulous record-keeping. A well-organized system gives you a clear view of your practice’s financial health at all times, not just during tax season. Start by diligently tracking all your income and expenses, keeping digital or physical copies of receipts, bank statements, and invoices. Having these documents in order makes it easy to substantiate your deductions and ensures you don’t miss any savings. This level of organization is also your best defense if you ever face an audit. Good Business Accounting & Management is about making informed decisions for your practice’s future.
Choose the Right Accounting Software
If you’re still relying on spreadsheets, it might be time for an upgrade. Modern accounting software like QuickBooks or Xero can transform how you manage your practice’s money by streamlining bookkeeping, reducing manual errors, and saving you time. By connecting your business bank accounts and credit cards, transactions are automatically categorized, giving you a real-time look at your cash flow. This makes it easier to generate financial reports and collaborate with your accountant. Getting professional help with Accounting Software Implementation & Support ensures your system is set up correctly from the start.
Review Your Finances and Budget Regularly
A budget is not a set-it-and-forget-it document. To be effective, it needs your regular attention. Schedule time each month or quarter to review your financial statements, like your profit and loss statement. This regular check-in allows you to compare your actual performance against your budget and make adjustments before small issues become big problems. From a tax perspective, these reviews are invaluable. They help you monitor your income and expenses, which is crucial for making accurate estimated tax payments. This proactive approach is a core part of effective Business Tax Planning and helps you make strategic financial decisions.
Time Your Moves for Maximum Tax Savings
When it comes to taxes, timing is everything. It’s not just about what you deduct, but when you make financial moves. By strategically timing your income and expenses throughout the year, you can have a major impact on your practice’s tax bill. This isn’t a frantic, last-minute scramble in April; it’s a thoughtful, year-round approach to your finances. Proactive tax planning allows you to make informed decisions that align with your business goals, whether that’s purchasing new equipment or expanding your team.
Thinking about your finances in terms of tax seasons—not just the April 15th deadline—helps you stay in control. It means looking ahead and understanding how today’s decisions will affect your tax liability later. For example, knowing when to invest in new dental technology or when to pay for next year’s professional development courses can make a significant difference. This level of foresight is a core part of effective business accounting and management. By adopting a strategic calendar for your financial activities, you can turn tax season from a source of stress into an opportunity for savings. It transforms your financial management from reactive to proactive, ensuring you’re always prepared for what’s next. The following strategies will help you master the art of timing for a healthier bottom line.
Plan Your Year-End Taxes
The end of the year offers a golden opportunity to fine-tune your tax situation. Effective year-end tax planning does more than just safeguard your practice’s financial health; it sets you up for a prosperous new year. This is the time to review your income and expenses, project your annual profit, and identify any last-minute moves that could lower your tax liability. For instance, you might consider stocking up on necessary dental supplies or paying for equipment maintenance before December 31. A thorough review helps you maximize your deductions and ensures you don’t leave any money on the table. This is a key part of any solid business tax planning strategy.
Handle Quarterly Taxes and Estimated Payments
As a practice owner, you can’t wait until April to pay your taxes. The IRS requires you to pay income tax as you earn it through estimated quarterly payments. Managing these payments is crucial for avoiding underpayment penalties and maintaining good standing. With tax laws constantly evolving, having a forward-thinking strategy is essential for compliance. This means accurately calculating your expected income for the year and setting aside the right amount for each payment deadline. Getting this right prevents a surprise tax bill and helps you manage your cash flow smoothly. If you do receive a notice, having an expert handle your tax notice and audit representation can provide peace of mind.
Defer Income and Accelerate Deductions
One of the most effective timing strategies is to control when income and expenses are officially recorded. The concept is simple: if possible, push income into the next year and pull expenses into the current one. For example, you could delay sending patient invoices in late December until January, shifting that income to the next tax year. At the same time, you can accelerate deductions by prepaying for conference registrations or renewing professional subscriptions before the year ends. For practices structured as C corporations, paying out year-end bonuses can also be a smart way to reduce taxable profits. This approach gives you more control over your taxable income and is a cornerstone of strategic business tax planning.
How Your Business Structure Impacts Your Taxes
The way your dental practice is legally structured is one of the most significant financial decisions you’ll make. It’s not just a box you check on a form; your business entity—whether it’s a sole proprietorship, an S-Corporation, or another structure—directly affects your tax liability, your personal liability, and your ability to save for the future. Choosing the right structure from the beginning can save you thousands of dollars annually and prevent major headaches down the road.
Think of your business structure as the foundation of your financial house. A weak foundation can lead to problems like a higher tax burden and unnecessary risk, while a strong one supports growth and stability. This is a core component of effective business tax planning, and it’s something you should review with a professional as your practice evolves. What worked when you were just starting might not be the most advantageous structure once you’ve grown, hired staff, and invested in new equipment. Taking the time to understand your options is a proactive step toward building a more profitable and secure practice.
Sole Proprietorship vs. Corporation
Many dentists start their practices as sole proprietors because it’s the simplest path. However, this simplicity can come at a cost. As a sole proprietor, all your business profits are subject to self-employment taxes (Social Security and Medicare) on top of your regular income tax. This can lead to a surprisingly high tax bill at the end of the year.
Structuring your practice as a corporation, on the other hand, can create a more favorable tax situation. Corporations are separate legal entities, which allows you to pay yourself a reasonable salary. This distinction can help lower your overall tax burden. You also gain the ability to deduct a wider range of business expenses, further reducing your taxable income. While it involves more administrative work, the potential tax savings often make it a worthwhile move for a growing dental practice.
The Benefits of an S-Corporation
For many dental practices, the S-Corporation offers the best of both worlds. This structure allows profits to “pass through” directly to you, the owner, without being taxed at the corporate level first. This avoids the double taxation that can occur with traditional C-Corporations. You’ll pay income tax on the profits, but you can significantly reduce your self-employment tax liability.
Here’s how it works: As an S-Corp owner, you pay yourself a “reasonable salary,” and payroll taxes are only applied to that amount. Any remaining profit can be taken as a distribution, which is not subject to self-employment taxes. This salary-and-distribution strategy is a powerful way to keep more of your hard-earned money. Plus, an S-Corp provides liability protection, separating your personal assets from your business debts. Proper entity formation is key to getting these benefits.
Work with a Tax Professional
While managing your practice’s finances yourself can feel empowering, the world of dental taxes is uniquely complex. From specialized equipment deductions to navigating payroll for your staff, the details can be overwhelming. Partnering with a tax professional isn’t just about filing your return correctly; it’s about having a strategic ally who can help you build a financially healthy practice for the long run. Think of it as an investment in your peace of mind and your practice’s future, allowing you to focus on what you do best: caring for your patients. A good advisor helps you move from simply reacting at tax time to proactively planning all year round.
Know When to Call a Tax Expert
It’s a common misconception that you only need an accountant during tax season. The best time to connect with a tax expert is long before any deadlines loom. If you’re starting a new practice, experiencing significant growth, or planning a major equipment purchase, a professional can help structure these events for the best tax outcome. Tax laws are constantly shifting, and having a proactive business tax planning strategy is essential to stay compliant and adaptable. An expert can provide the foresight you need to prepare for legislative changes, ensuring your practice doesn’t get caught off guard by new rules or miss out on new opportunities.
Choose the Right Tax Advisor for Your Practice
Not all tax advisors are created equal, and finding the right fit for your dental practice is key. Look for a professional or firm with specific experience in the healthcare or dental industry. They’ll already be familiar with the common deductions, credits, and financial benchmarks relevant to your field. Beyond just tax preparation, you want a partner who offers comprehensive business accounting and management services. The right advisor will take the time to understand your practice’s specific goals, from expansion plans to your personal retirement strategy, and help you create a financial plan that supports them. Regular reviews and open communication are signs of a great partnership.
Common Tax Pitfalls and How to Avoid Them
Even the most organized dental practice owner can fall into common tax traps. These mistakes often aren’t intentional—they happen when you’re busy focusing on your patients and managing your team. But a small oversight can quickly turn into a major headache with the IRS, leading to audits, penalties, and unnecessary stress. The good news is that most of these pitfalls are entirely avoidable with a bit of foresight and the right systems in place.
Think of it as preventative care for your practice’s financial health. By understanding where dentists most often go wrong, you can take simple, proactive steps to protect your business. From missing out on valuable deductions to making simple bookkeeping errors, being aware of these issues is the first step toward a smoother, more predictable tax season. It’s about building strong financial habits that become second nature, just like the oral hygiene habits you teach your patients. This approach not only saves you money but also gives you peace of mind, allowing you to focus on what you do best: providing excellent dental care. Let’s walk through some of the most frequent missteps and what you can do to steer clear of them.
Overlooked Deductions and Credits
It’s easy to leave money on the table by missing deductions and credits you’re entitled to. For example, many dentists assume their services are exempt from sales tax, but forget that selling products like electric toothbrushes or whitening kits can create a sales tax obligation. Beyond that, tax laws are constantly changing. A credit that wasn’t available last year might be perfect for your practice this year. A proactive business tax planning strategy is essential for keeping up with these changes and making sure you’re not overpaying. Regularly reviewing your expenses with a professional can uncover savings you didn’t even know existed.
Misclassifying Employees and Contractors
One of the most costly mistakes a practice owner can make is misclassifying an employee as an independent contractor. While it might seem like a way to save on payroll taxes, the IRS takes this classification very seriously. If they determine a worker you’ve paid as a contractor should have been an employee, you could be on the hook for back taxes, penalties, and interest. The key difference often comes down to control—if you dictate how, when, and where the work is done, that person is likely an employee. When in doubt, it’s always safer to consult an expert to ensure your business accounting and management practices are compliant.
Mixing Personal and Business Finances
When you’re running your own practice, it can be tempting to pay for a business lunch with a personal card or vice versa. However, mixing your finances is a recipe for disaster. It makes bookkeeping a nightmare, complicates tracking legitimate business deductions, and can even put your personal assets at risk if your practice is ever sued. The solution is simple: open a dedicated business bank account and credit card from day one. Run all your practice income and expenses through these accounts exclusively. This clean separation makes financial tracking easier and provides the clear documentation you need to defend your deductions in case of an IRS audit.
Plan for Long-Term Growth and Tax Savings
Smart tax planning goes beyond finding deductions for the current year. It’s about building a financial framework that supports your dental practice for years to come. When you look at your finances with a long-term perspective, you can make strategic decisions that not only reduce your tax liability now but also pave the way for sustainable growth, a secure retirement, and a smooth transition when you eventually decide to step away from the chair. This forward-thinking approach turns your tax strategy from a yearly chore into a powerful tool for building wealth.
Thinking ahead allows you to align your business goals with your financial actions. Are you planning to expand your practice, bring on an associate, or invest in cutting-edge technology? Each of these moves has significant tax implications. By creating a comprehensive business tax plan, you can structure these investments to your advantage. It’s about making sure your financial foundation is strong enough to support your ambitions, ensuring that every dollar you invest is working as hard as possible for the future of your practice.
Create a Strategy for Expansion and Equipment
As your practice grows, you’ll inevitably need to invest in new equipment or even expand your physical space. Timing these major purchases is a key part of your tax strategy. When you buy a new dental chair or imaging system, you have options. You can depreciate the cost, spreading the deduction out over the asset’s useful life, or you might be able to expense the entire cost immediately using Section 179. Thoughtful business accounting and management helps you decide which method makes the most sense for your cash flow and tax situation in any given year, ensuring your investments support your growth without creating a financial strain.
Plan for Retirement and Succession
Planning for your future is one of the most effective ways to save on taxes today. Contributing to retirement plans like a SEP IRA or a 401(k) directly reduces your taxable income for the year, all while building your personal nest egg. You should aim to maximize your contributions before the year ends to get the full benefit. Thinking even further ahead about succession planning isn’t just for those nearing retirement; establishing a clear plan early on can provide peace of mind and significant tax advantages when it’s time to transition your practice. These strategies directly impact your individual income tax return and set you up for a secure future.
Stay on Top of Tax Law Changes
The world of taxes is constantly shifting, with new laws and regulations introduced regularly. What worked as a great strategy last year might not be the best approach this year. Having a forward-thinking plan is crucial for adapting to this ever-evolving landscape. You don’t have to spend your evenings reading IRS publications to stay informed. Working with a tax professional ensures you’re always aware of relevant changes and can adjust your strategy accordingly. This proactive approach not only helps you save money but also keeps you compliant, reducing the risk of triggering a notice or needing audit representation.
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Frequently Asked Questions
I’m just starting my practice. What are the first financial steps I should take? Your first move should be to set a strong financial foundation. Immediately open a separate business bank account and credit card to keep your practice’s finances clean from day one. This simple step makes tracking expenses and proving deductions much easier. At the same time, think about your business structure. While starting as a sole proprietor is simple, discussing options like an S-Corporation with a professional early on can save you significant tax money as your practice grows.
My practice is growing. When should I consider switching from a sole proprietorship to an S-Corporation? There isn’t a magic number, but a key indicator is when your practice’s profits are high enough that the self-employment tax savings would outweigh the administrative costs of running a corporation. If your net income is consistently growing and you’re looking for ways to be more tax-efficient, it’s the perfect time to have a conversation with a tax advisor. They can run the numbers to show you the precise financial benefit of making the switch.
What’s the real difference between a tax deduction and a tax credit? It’s a great question because they sound similar but have very different impacts. A deduction lowers your taxable income, so its value depends on your tax bracket. For example, a $1,000 deduction might save you $240 or $350, depending on your rate. A tax credit, however, is a dollar-for-dollar reduction of your actual tax bill. A $1,000 credit saves you exactly $1,000, making credits much more powerful.
I feel like I’m tracking my expenses, but how do I know if I’m missing deductions? This is a common concern, and it’s tough to know what you don’t know. Even with great record-keeping, you might overlook less obvious write-offs like the home office deduction or specific professional development costs. The best way to ensure you’re not leaving money on the table is to have a professional who specializes in dental practices review your finances. They are familiar with industry-specific deductions and can spot opportunities you might have missed.
Is it better to buy new equipment at the end of the year? Buying equipment at year-end can be a very smart tax move, but it depends on your overall financial picture. Thanks to Section 179, you can often deduct the full cost of new equipment in the year you buy it. If your practice has had a profitable year, making a large purchase before December 31 can significantly reduce your taxable income. However, it’s a strategic decision that should be made in consultation with your tax advisor to ensure it aligns with your cash flow and long-term goals.
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