Tax Deductions For Dentists

5 Ways Dental Practices Can Take Advantage of the 20% Pass-Thru Deduction

Dental CPA in Los Angeles, CA

Tax reform, commonly referred to as the Tax Cut and Jobs Act, has many new provisions that became effective for tax years beginning January 1st, 2018. One provision in particular created a deduction up to 20% of “qualified business income” earned from pass-thru entities and sole proprietors.

Dental practice owners may want to consider this new tax savings opportunity, but it is subject to a host of qualifications and limitations, so it requires careful strategic tax planning.

The deduction will be claimed on individual owners’ tax return Form 1040 and is commonly being referred to as the Section 199A deduction (referencing the Internal Revenue Code), or the 20% qualified business income deduction (QBID).

Business income is eligible if the company is structured as a Sole Proprietorship, a Partnership, or an S-corporation. C corporations are not eligible to take this deduction. Personal taxable income must be less than $315,000 for a married filer or $157,500 for a single filer to avoid the deduction being phased out. The deduction is fully phased out at taxable income of $415,000 for a married filer and $207,500 for a single filer.

Here are our Top 5 Strategies for dental practice owners to consider.

  1. Increased Retirement Plan Contributions
    Increasing retirement plan contributions can reduce taxable income. Consider increasing contributions to an existing plan and consider if establishing a cash balance plan might be an additional vehicle for increasing contributions.
  2. Employing Children in Your Practice
    You may have an opportunity to employ your children and pay them the highest reasonable rate for their work. Now each child can earn up to $12,000 per year free of federal income tax.
  3. Review Personal & Business Expenses
    Consider whether some expenses can be captured as business expenses such as meals, phone, health insurance, travel, auto, etc.
  4. Take Advantage of Depreciation
    Review all depreciation schedules and opportunities to keep income under the deduction thresholds.
  5. Health Savings Account
    Establish and fund a Health Savings Account (HSA). Coverage under an HSA can provide tax-deductible contributions of up to $6,900 for a family and an additional $1,000 for each spouse age 55 or older.

Though tax reform is complex with lots of qualifiers and limitations careful tax planning can produce significant tax savings.

Dental CPA in California 

Our mission as Dental CPAs in California is to help dentists to establish a clear set of areas for excellence in the dental business and personal life.

We have been providing dental professionals with the tax and management consulting services they need to grow and maintain their practices. Because we specialize in the Dental field, we understand the questions, concerns, and business decisions that you are faced with every day.

Our Services Include:

  • •             Accounting for Dentists
  • •             Bookkeeping for Dentists
  • •             CFO Services for Dentists
  • •             Income Taxes for Dentists – Business & Personal
  • •             IRS Tax Resolution for Dentists
  • •             Online Bill Pay for Dentists
  • •             Payroll for Dentists
  • •             Tax Planning for Dentists
  • •             Financial Planning For Dentists
  • •             Dental Office Purchase Due Diligence
  • •             Dental CPA specializes in tax and accounting services for dental practices.
  • FAZEL MOSTASHARI, MBT, CPA/CFP
  • •             Master of Business Taxation, MBT
  • •             Certified Public Accountant, CPA
  • •             Personal Financial Specialist, CPA/PFS

Is a DentalCPA assisting dental professional in all areas of tax, accounting, consulting, financial and business matters. He also specializes in startups, acquisitions, financial due diligence, valuation and transitions of dental practices.

Next Steps…

We offer a FREE initial consultation for dental Professionals. Call 1 (818) 884-2549 today for a free, confidential consultation and ask for Fazel Mostashari.

DENTAL ACCOUNTING AND TAX SERVICES In LOS ANGELES

Our Dental CPA firm is located in Los Angeles, CA specializing in dental accounting, consulting, tax and financial planning services for the professionals in the dental industry. We’ll take tedious accounting and bookkeeping tasks off your hands, saving your time and resources, so you can concentrate on the clinical side of dentistry business. Our highly effective tax planning strategies will ensure that your practice is taking advantage of all available deductions so you certainly not overpay your taxes.

We work with everyone from general dentists and independent dental contractors to orthodontists, oral surgeons and all kinds of dental professionals. Our goal is to effectively manage your finances so you can focus on caring for patients. Call us today at (818) 884-2549 to schedule a free initial consultation with Los Angeles Dental CPA so we can learn more about the accounting and tax needs of your practice.

  • •             Accounting for Dentists In Los Angeles
  • •             Bookkeeping for Dentists In Los Angeles
  • •             CFO Services for Dentists In Los Angeles
  • •             Income Taxes for Dentists – Business & Personal
  • •             IRS Tax Resolution for Dentists In Los Angeles
  • •             Online Bill Pay for Dentists
  • •             Payroll for Dentists In Los Angeles
  • •             Tax Planning for Dentists In Los Angeles
  • •             Financial Planning For Dentists In Los Angeles
  • •             Dental Office Purchase Due Diligence In Los Angeles
  • •             Dental CPA specializes in tax and accounting services for dental practices. In Los Angeles
  • •             Accounting for Dentists In California
  • •             Bookkeeping for Dentists In California
  • •             CFO Services for Dentists In California
  • •             Income Taxes for Dentists – Business & Personal
  • •             IRS Tax Resolution for Dentists In California
  • •             Online Bill Pay for Dentists In California
  • •             Payroll for Dentists In California
  • •             Tax Planning for Dentists In California
  • •             Financial Planning For Dentists In California
  • •             Dental Office Purchase Due Diligence In California
  • •             Dental CPA specializes in tax and accounting services for dental practices In California

About the Author

Fazel Mostashari

Fazel Mostashari

Fazel Mostashari is a dental practice expert whose specialty is financial accounting, tax planning, and practice purchase and set up for the dental industry. He is married to a dentist, and together they operate a successful, multi-specialty practice in Woodland Hills, CA. To learn more, visit https://www.dentalcpaca.com

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