Dentists that work as independent contractors have a unique advantage when it comes to paying lower taxes. With the correct structure a dentists working as a contractor can not only have thousands of dollars in additional tax deductions, but they can also contribute much more to a 401k plan than a employee.
Below are some of the key tax deductions a Dentists working as a contractor can take:
- Cost of Uniforms/ Scrubs/ Lab coats ect
- Meals if they are business related & documented (such as discussing a procedure on a patient, meeting with practice owners to discuss new business opportunities)
- Supplies used at the dental office
- Education Courses such as Continuing Education (Must not qualify you for another career)
- Professional Dues and Subscriptions
- State Dental Licenses
- Malpractice Insurance
- Professional Fees paid to a Lawyer, CPA, ect
- Cell Phone (Business use portion of your cellphone)
- Parts of your rent or mortgage, if you use a portion of your home or apartment as a home office to do administrative work such as review patient files, pay bills, or talk to your good friends at Virjee Consulting
- Mileage is deductible if you work at multiple locations and drive between them or if you have a home office you can deduct the miles from your home office to your client location (The practice your are doing contract work for)
Even greater tax savings can be achieved if a contractor incorporates their business and elects to be taxed as an S Corporation. We advise that there are many requirements to operate as an S Corporation so one should have a CPA that is well versed in this structure. This isn’t one of those “do it your self” scenarios. Errors, miss filings and penalties from the IRS can be stiff. Luckily
Virjee Consulting has a program that walks you through all the steps. This includes handling all of the boring tax filings, working with you throughout the year and the best part is the tax savings are often significantly higher than our program fees. So its a win-win situation.
Here’s to your best financial future ever!