The Complete Guide To Dental Tax Planning 2022

Working Towards Effective Dental Tax Strategy  

To reduce their responsibilities and risks, dental practises must plan their tax strategies carefully. This is particularly true when you take into account that almost all company transactions are subject to taxation. When it comes to tax preparation, it’s important to be abreast of current tax law changes and how they can affect your dental cpa office. Unfortunately, a large number of dental cpa owners either don’t undertake any tax preparation at all or wait until the last minute to start, which severely restricts the alternatives they have when it comes time to file their tax returns.

Simply stated, by going through the tax strategic planning, your dental practice is better prepared to anticipate its future tax obligations. Because of this, you may devise tactics to help lower your taxable income in the long run.

A chance To Start Thinking for your Future Retirement

When most dental cpa practice owners and advisers consider a retirement strategy, they focus on tax savings for the existing and anticipated years while also preparing for the ultimate sale of the dental cpa practice after the owner retires. With less anticipated yearly income, the retirement fund deferred compensation may be utilised to sustain a more relaxed lifestyle for dentists and their partners in their golden years.

There are many ways to save for retirement now that don’t require paying taxes on the money you put away. The good news is that until you take money out of your retirement account, you won’t have to pay taxes on the money you put away. Additionally, Dependent Care Savings Accounts are one example.

Accelerating Deductions  

If you anticipate you’ll need new equipment or a considerable number of supplies in the following year, you may pay these expenditures in advance for an accelerated deduction.

As long as the costs are reported before December 31st, they may be pre-paid using a business credit card with a no-interest option, reducing the burden on the company’s financial resources in the future. 

Section 179

Many dentists can double or treble the depreciation expenses on buildings using an engineering analysis that separates “building costs” from “patient treatment costs.” Similarly, the capital-intensive dentistry industry benefits greatly from Section 179 laws that allow expenses of up to $500,000 for new equipment.

Entity difficulties are killing the deductions in both circumstances, not a lack of information on the requirements. Both situations need meticulous preparation to reap the rewards of the tax break.

New Developments In Legislature

If your firm does not have a 401(k) plan, you may want to create one now to take advantage of recent legislation changes if your company does not already have one. To encourage companies to implement 401(k) programmes, Congress passed the SECURE Act on January 1, 2020. 

Take a second look at your retirement plan paperwork if you already have one in place. The IRS requires owners who sponsor 401(k) programmes to restate their documentation every six years. The restatement period for the plan document is now in force and will terminate on July 31, 2022.

Changing your plan’s terms to comply with the IRS’s restatement may save you money on amendment fees and time as well. 

Wrapping Up 

A comprehensive tax strategy might help you pay less in taxes or get a larger return at the year’s end. However, although paying certain taxes is unavoidable, there are strategies to lessen your tax burden and save more money each year. If you do your tax planning right, you may be able to grow your dental cpa practice’s finances while also increasing your take-home pay.