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- What Every Dentist Needs to Know About Tax Savings in 2023
What Every Dentist Needs to Know About Tax Savings in 2023
As a dentist, you work hard to provide top-notch care to your patients and ensure you’re keeping as much of your hard-earned money as possible. That is why it’s essential to work with a trusted CPA who understands your specific accounting needs.
At Interactive Accountants, we help our clients save as much as they can on their tax returns. We have the expertise needed to guide you so that you don’t make critical mistakes that could end up costing you. Many times our clients don’t realize the tax savings that are easily available to them. The result? Wasted money that could have ended up in their pockets.
As you prepare for the 2023 tax season as a dentist, we have 12 tips to get the most out of your tax return.
12 Tips to Maximize Tax Savings for Dentists
Look into Tax Planning
Tax planning involves developing a strategy to minimize your tax liability while still adhering to tax laws. When this is done correctly, it should lower the amount you’re paying. Tax planning uses deductions and tax credits to their potential. Many successful dental practices use tax planning as part of their financial operations.
Choose the right business structure
Many dentists end up paying taxes they don’t have to because their business is filed under the wrong structure. It’s worth exploring how your business is set up and if it is the best way to maximize your tax savings.
Keep track of all business expenses
Whether you’ve traveled to a dental conference or have bought office supplies, you want to keep track of all expenses. Save your receipts and keep accurate records so you can take advantage of the deductions you are eligible for.
Don’t forget about moving expenses
If you’ve moved your practice, keep track of moving expenses. If you have relocated a business, these expenses can be deducted from your business taxes. You can also deduct your personal expenses that are moving-related if they meet the IRS criteria. It’s certainly something to look into!
Ask about the Qualified Business Income Deduction (QBI)
QBI is a tax deduction that allows eligible self-employed and small business owners to deduct up to 20% of their qualified business income. Eligible income can come through an “S” corporation, partnership, or sole proprietorship. There are some limitations to QBI that could impact your ability to use this tax deduction.
Take advantage of depreciation
While everyone likes to have new things, take advantage when your business-related items depreciate. Equipment, vehicles, and furniture are all things that can go down in value. When they do, you can lower your taxable income and reduce your tax liability. Keep track of when items were purchased so that you can keep track of when their value decreases.
Explore your business insurance
If your practice has a business insurance plan that meets the “ordinary and necessary” clause, it is tax-deductible. You may have business insurance for employee medical expenses, benefits, or commercial property insurance, among other things.
Consider a retirement plan
It’s always a good idea to think about the future. Contributing to a retirement plan like a SEP or solo 401(k) can provide you with significant tax savings. These plans allow you to make pre-tax contributions, which reduces your taxable income and lowers your tax bill.
Once you have a retirement plan in place, consider contributing as much as you can. At Interactive Accountants, we can guide you when it comes to retirement plan contributions so that you’re not only saving money but also saving on tax expenses.
Look at charitable donations
Many people and businesses seem to forget when they donate to charities throughout the year. Keep track of all donations, big and small. When it’s time to do your taxes, present all of these receipts to your tax preparer so that they can be part of your deductions.
Don’t forget about home office expenses
If you have a designated home office space, you may be able to claim a deduction for a portion of your rent, utilities, and other home expenses, or better yet, speak to us about leasing your home to yourself and the Augusta Rule.
Utilize healthcare tax credits
If you provide health insurance to your employees, you may be eligible for the Small Business Health Care Tax Credit. This credit can be worth up to 50% of your premium costs. This is certainly something to look into when you’re looking at tax savings for dentists.
Keep up with tax law changes
Tax laws change more frequently than you think. You need to stay informed on any changes that could impact your business. When you hire Interactive Accountants as your CPA, we can help you understand how these changes affect your tax situation.
You can certainly save money on your tax return by taking advantage of these tips and taking the time to read our article on restricted property trusts. Here you’ll learn more tips on how restricted property trusts can help you maximize your tax savings. By working closely with us and taking advantage of the tax savings opportunities available, you can keep more of your hard-earned money and continue growing your business.
Trust Interactive Accounting for all of Your Business Accounting Needs
At Interactive Accountants, assisting businesses to grow and succeed financially is our number one goal. Our focuses include accounting services for:
We provide accounting services that help your business grow. You can trust us to be fair and honest as we help you get the most out of your money. Receiving tax savings for dentists is now convenient with our online service option.
To learn more about our services, schedule a free consultation with our owner Matthew Shiebler, CPA. He’s been practicing accounting for over 25 years and is proud to have a CPA firm that is comprised of accountants who care about accounting for healthcare professionals. We look forward to meeting you and helping with your accounting needs.