What Dentists Need to Know This Tax Season

Make sure all documents are gathered and prepared. These documents include W-2’s, IRS Form #1099, IRS Form #1099 Interest and IRS Form #1099 Dividends. Documents may include stockbroker annual statements, cryptocurrency transactions, IRS Form #1098 mortgage statements, etc.

Check receipts. Not only is it essential to have your documents gathered, but make sure all financial transactions have been accounted for prior to filing (i.e., payroll, any equipment depreciation and amortization of goodwill).

Be aware of deductions. There are the typical tax deductions (i.e., dental supplies, lab fees and employee payroll), but there may also be other deductions to be aware of. This includes equipment purchases, continuing education and new owner startup costs. Even how your business is set up as a taxing entity (employee, sole proprietor, corporation, LLC) can determine if the above expenses are deductible.

Remember to factor in all Health Savings Accounts. Health Savings Accounts (HSAs) are tax-exempt accounts that are used to pay or reimburse certain medical expenses. Having an HSA may qualify for a tax deduction.

Don’t forget about any individual retirement accounts (IRAs) contributions. If you are under 50, your total contributions in 2022 to all traditional IRAs and Roth IRAs can be at most $6,000. If you are 50 or older, that amount is $7,000.

This is the last call for the employee retention tax credit (ERTC). Watch out for those “pop-up” tax credit firms that claim to specialize in such credits. The statute of limitations is quickly approaching when you can file your amended payroll tax form using IRS Form #941X for the ERTC.

Consider using a dental accountant. Don’t hesitate to speak with an accountant about filing your taxes. It can be beneficial for dentists who are filing as owners for the first time.

Source: ada.org