Mississippi-based marketing and tax planning company Capital Preservation Services, LLC, helps business owners and professional service providers minimize their tax liabilities. Many of Capital Preservation Services’ clients are high-income professionals such as optometrists and dentists.
According to DentistryIQ, over 90 percent of dental professionals pay more in taxes than they need to since they don’t take advantage of certain tax opportunities. Here are several tax deductions for dental professionals that are often overlooked:
State Sales Tax
The ability to deduct sales tax from taxes is a relatively new change in tax law, so many people are unaware that it exists. However, dental practitioners can take advantage of the new deduction by claiming state sales tax or state income tax on their tax filings. If professionals live in a state without income tax, this deduction is even more beneficial.
Using the Wrong Business Structure
Perhaps the most common reason dentists overpay in taxes is because they don’t have their businesses set up as the correct type of entity. An S corporation saves most dentists the largest amount of money in taxes, yet many of them continue operating as C corporations or sole proprietorships. By changing their business structures, dentists can save up to 15.3 percent on their taxes.
Business Use of the Car
Dentists cannot deduct the cost of traveling to and from their dental offices and personal residences, but they can deduct the cost of traveling for business-related purposes. This includes going to the bank, traveling to continuing education courses, and completing other business-related trips. Documentation of these expenses is key to actually deducting them from annual taxes.
According to DentistryIQ, over 90 percent of dental professionals pay more in taxes than they need to since they don’t take advantage of certain tax opportunities. Here are several tax deductions for dental professionals that are often overlooked:
State Sales Tax
The ability to deduct sales tax from taxes is a relatively new change in tax law, so many people are unaware that it exists. However, dental practitioners can take advantage of the new deduction by claiming state sales tax or state income tax on their tax filings. If professionals live in a state without income tax, this deduction is even more beneficial.
Using the Wrong Business Structure
Perhaps the most common reason dentists overpay in taxes is because they don’t have their businesses set up as the correct type of entity. An S corporation saves most dentists the largest amount of money in taxes, yet many of them continue operating as C corporations or sole proprietorships. By changing their business structures, dentists can save up to 15.3 percent on their taxes.
Business Use of the Car
Dentists cannot deduct the cost of traveling to and from their dental offices and personal residences, but they can deduct the cost of traveling for business-related purposes. This includes going to the bank, traveling to continuing education courses, and completing other business-related trips. Documentation of these expenses is key to actually deducting them from annual taxes.
