Believe it or not 2016 is coming to an end! Here are some year end tax strategies dentists can use to put more cash in their pockets.
Dentists working as Independent Contractors
- If you haven’t already setup a S Corporation, you may want to do so soon. Dentists working as contractors can save thousands in taxes.
- Consider contributing to a 401k. You can defer income taxes on up to $53,000 in income. At a 25% tax rate that can equate to $13,250 in tax deferrals.
- If you have a S Corporation, than consider setting up a reimbursement plan. You can write off home office and business mileage – this can put thousands of tax dollars back in your pocket.
- Have your S Corporation pay for your health insurance and contribute to your HSA. There needs to be some coordination on the payroll side, but its well worth it.
Dentists who own their own Practice
- Consider if you should replace old equipment with new before year end. By doing so you may be able to elect Section 179 depreciation. This can mean considerable tax savings for the current year.
- Consider setting up a practice 401K plan, you may be able to create employee classes therefore contributing more to the owner doctor vs admin staff.
- Consider employing your children that are 6 or older to work in the practice where feasible. If the practice is not a S Corp, you can pay the child up to the standard deduction amount, and they wont be taxed on that dollar amount.
- Consider having your practice reimburse you for mileage, travel, and other expenses which were paid personally.
Interested in setting up your contractor business as an S Corp? Contact us today to see if this strategy will benefit you!
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!
Disclaimer- Advise in this blog should not be taken as tax advise. Each person’s tax circumstance is different and unique. Using these strategies without full knowledge of the current IRS rules and regulations regarding the specific items discussed can result in heavy fines, penalties and interest. Please discuss the guidance in this document with a tax expert before making any decisions.