As we close out the end of the year and head into the New Year, it’s time to make sure your dental practice won’t be leaving any money behind in 2024.
These last few months of the year are when you can make sure you’re not missing out on some valuable savings.
Here’s a simple checklist to make sure you’re not leaving any deductions on the table and even some tips to optimize your tax savings before December 31st.
Are You Capturing All of Your Practice Expenses?
Think about the usual costs that come with running your practice—did you capture everything you could? Things like seminar fees, license renewals, and office expenses can all be deducted if they’re documented correctly.
Here’s a quick list of common expenses to double-check:
- Staff salaries and wages (don’t forget payroll taxes).
- Your own salary (if you’re running as an S-Corp).
- Dental supplies like gloves and syringes.
- Continuing education: seminars, courses, or certifications.
- Rent, utilities, and office maintenance.
- Marketing and advertising.
- Fees for your bookkeeper, lawyer, or other pros helping your business.
- Mileage for business-related driving.
- Outsourced dental work, like crowns or dentures.
Pro Tip : If you know of any regular expenses for the next year—like office supplies, memberships, or even marketing campaigns—consider prepaying them before December 31st. Prepaid expenses can often be deducted in the current tax year, giving you an immediate tax break.
Just make sure to follow this approach consistently each year to stay compliant with IRS rules.
If you spot anything you haven’t claimed yet, now’s the time to fix it. Expenses you pay by December 31 count toward this year’s return. If you missed a deduction on a past return, you can usually still claim it on an amended return. You generally have 3 years from filing, or 2 years from paying the tax, whichever is later.
Taking Advantage of Depreciation for Equipment
Depreciation is like a tax break for businesses, allowing you to deduct the cost of equipment over time.
It’s a non-cash expense, which means it lowers your taxable income without affecting your cash flow. So, taking full advantage of depreciation can reduce your tax burden without hurting your cash reserves.
As a dental practice, you have three options to choose from:
- MACRS (Modified Accelerated Cost Recovery System): This spreads deductions over the asset’s lifespan, with bigger deductions in the early years.
- Section 179 Deduction: Deduct up to 100% of an equipment’s cost this year (up to $2,560,000 for tax years beginning in 2026).
- Bonus Depreciation: Deduct 100% of the cost of qualifying equipment acquired after January 19, 2025, in the year you place it in service.
Pro Tip: Planning to purchase new equipment soon? Buying and placing it in service before December 31st allows you to claim the deduction this year. It’s a great way to lower your tax burden while investing in your practice.
Each option works a little differently, so chat with your accountant to see what fits your practice best.
Consider Retirement Plan Contributions
Do you have employees?
If so, retirement plan contributions aren’t just a nice gesture—they’re also tax-deductible. Plans like 401(k)s, SEP IRAs, and SIMPLE IRAs help you lower your taxable income while boosting employee morale.
Pro Tip: Don’t wait until the last minute. Make sure contributions are made by the deadlines to qualify for this year’s deductions.
If you’re considering setting up a new retirement plan, start immediately so everything is in place before the cutoff.
Don’t Forget About Fringe Benefits
Beyond the obvious deductions, some lesser-known “fringe benefits” can reduce your taxable income while giving back to your employees. As long as these benefits are reasonable and documented, they’re fair game for tax deductions.
Here are a few examples:
- Insurance benefits – Health, life, and disability insurance you offer to employees count.
- Educational assistance – Training, courses, and certifications you provide for yourself and your team are deductible.
- Transportation or gas allowance – If you cover transportation, that’s deductible.
- Childcare assistance – Onsite or reimbursement for childcare.
- Employee meals and lodging – If you’re covering meals or lodging, those count too.
- Gym memberships or wellness programs – Any perks you offer for health and wellness qualify.
- Employee discounts on dental services – Discounts that extend to employees’ family members are deductible.
- De minimis benefits – Small, occasional perks like coffee or snacks for the team are included as well. Cash and gift cards never qualify, however small.
Not only do these benefits lower your tax bill, but they also help create a better work environment for your team—always a plus!
Need More Help Reducing Your Dentist Taxes?
Many expenses in your practice can add up to real tax savings, and it’s common to miss a few deductions here and there.
If you feel you’ve been overpaying, now’s a great time to review and reclaim those savings.
At Core Advisors, we work with dental practices to make sure every qualifying expense is deducted properly, helping you keep more of what you earn.
If you want to make sure you’re getting the most out of your deductions, let’s talk! Simply head over to our Contact Page to book your first call. We’re always here to help!
Until next time.
