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5 Income Tax Planning Tips for Dentists

Taxes are as painful for dentists as getting a tooth extracted. But there are ways by which it can be made less painful. Listed are five income tax planning tips which can lead to sizeable savings.

5 Income Tax Planning Tips for Dentists

  • Depreciation on purchase of equipment
    • The most important step a Dentist can take today is to purchase equipment. With the latest legislation coming into effect from February 2009, depreciation may be the single largest source of tax savings. Instead of depreciating the cost of equipment over several years, it is now possible for Dentists to claim depreciation in the first year. In addition to Section 179 deduction, small business owners can claim an additional fifty percent Bonus Depreciation. When we consider that Dentists usually fall under the maximum tax bracket, this amount could be substantial. Purchase of furniture for office use is also allowed for claiming depreciation benefits.
  • Employing spouse
    • Employing your spouse in your Dental business and showing their earnings as a expense is a great way to save tax. There have been instances where IRS has disallowed such expenses to be shown for tax purposes because many Dentists that are business owners do not keep records of the attendance and the actual work done by the spouse. Good record keeping is essential for claiming tax deductions. Another factor which must be kept in mind is that salaries should actually be paid and shown as salary expense. One cannot claim tax deduction by simply showing paper expenses. By keeping good records and making actual payments as salaries, bonuses and other expenses can lead to better tax management.
  • Vehicle depreciation
    • To claim tax deduction for depreciation of a vehicle, it must be used for business purposes. The laws regarding vehicle depreciation have become complex and understanding them could be difficult. A qualified CPA would be able to advice you on this matter more effectively.
  • Green savings
    • In order to promote green technology and energy savings, the government has allowed certain tax deductions for green buildings. In many cases this can be a huge saving. Dentists and business owners can claim tax deductions by installing green technology.
  • Commercial building depreciation
    • Since the depreciation for a commercial building is spread over a lengthy period of time, it may seem like a small amount. However, taken over the lifetime of the building this can add to a sizeable amount and should not be overlooked.

The five tax saving tips for Dentists are practical and one need not spend much effort in enjoying the benefits. Often tax laws can be confusing to taxpayers so it is important to seek the professional help of a CPA. The payment to a CPA can be quickly recovered through tax savings. Another benefit of using a CPA is obviously to counter the claims made by the IRS, which can be quite confusing and unpleasant.

Call us today at 713-661-1040 and let us put our experience in working with dentist and medical professionals to work for you. Protecting your bottom line is our top priority!

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