Tax help for dentists and practice owners
We know a lab bill from a supply bill, and why your production number is not your taxable income. English or Spanish, wherever your practice is.
Nothing is due today. Personal returns start at $250.
A dental practice has a cost structure almost nothing else has. Lab bills that swing with your case mix, an operatory full of financed equipment, consumables you burn through every day, a payroll of hygienists and assistants, and a ledger where production, collections, and insurance adjustments are three completely different numbers. Deposits alone do not tell that story, so we start with your collections report and work back through the ledger until the return matches the practice you actually ran.
What dentists can usually deduct
Ordinary and necessary costs of your work. Rules and dollar limits change year to year, so we confirm every one of these against the current year when we prepare your return.
Dental lab bills
Crowns, bridges, dentures, night guards, surgical guides, and aligner trays billed by your outside lab are a straight business expense. Keep lab work on its own line rather than lumping it in with supplies, because it moves with your case mix.
On a cash basis the lab bill belongs to the year you paid it, not the year the crown was seated. Match your lab statements to actual payments before year end, because a December case paid in January lands on next year's return.
Operatory equipment and build-out
Chairs, delivery units, operatory lights, stools, cabinetry, the compressor, and the vacuum pump are all deductible business assets. So is the plumbing and electrical work to add an operatory.
These are assets, not a same day write-off. Equipment has to be placed in service, meaning installed and ready to use, in the year you claim it. A unit still in the crate at year end does not count. Improvements to a leased suite are generally written off over time rather than in the year you wrote the check, although certain interior improvements can qualify for faster treatment, so let us look at the invoices.
Imaging, scanners, and CAD/CAM
Digital sensors, panoramic units, cone beam machines, intraoral scanners, milling units, 3D printers, and the imaging software licenses that run them are deductible practice equipment.
If the unit is financed, you do not deduct the monthly payment. You deduct the equipment cost through depreciation or a first year expensing election, and only the interest portion of each payment is a separate expense. If it is a true lease rather than a financed purchase, the treatment is different, so send us the contract and the amortization schedule, not just the bank statement.
Handpieces, loupes, and instruments
High speed and electric handpieces, loupes and headlamps, curing lights, ultrasonic scalers, hand instruments, burs, and the repair or maintenance contracts that keep them running.
Instruments and loupes you bought before you were in business are not simply written off in your first year of practice. Costs incurred before the practice opens follow the start up cost rules, and personal property you later bring into the practice follows the conversion to business use rules. List those items so we can place them correctly. Once you are open, repairs and small replacements are current expenses, while a major handpiece motor or a new loupe system is generally treated as equipment.
Clinical supplies and infection control
Composite, bonding agents, impression material, anesthetic carpules, gloves, masks, bibs, suction tips, fluoride varnish, prophy paste, and implant or ortho components. Sterilization pouches, autoclave service, spore testing, waterline testing, sharps and biohazard pickup, amalgam separator service and recycling, and x-ray equipment registration fees belong here too.
Keep supply invoices separate from lab invoices. When the two are combined into one vague line, neither you nor your preparer can tell whether your supply cost per collected dollar is drifting.
License, DEA, and continuing education
Your state dental license renewal, DEA registration, state controlled substance registration, ADA, AGD, specialty and local dental society dues, required CE hours, hands on courses, study club fees, and the travel and lodging to attend them.
Education that maintains or improves the skills of the practice you already run is deductible. Education that qualifies you for a new profession is not. A weekend occlusion or implant placement course generally falls on the deductible side. A full specialty program is a different question, so let us look at it before you claim it.
Team payroll and benefits
Wages for hygienists, assistants, front desk, and associates, plus your share of payroll taxes, the scrubs and lab coats you buy for the team, their CE and license renewals, health coverage, and retirement plan contributions you make on their behalf.
An associate dentist, a traveling hygienist, or a specialist who comes in one day a month gets a Form 1099-NEC only if they are genuinely independent. If you set their schedule, supply the operatory and the materials, and control how the work is done, the IRS may treat them as an employee, and a reclassification brings back payroll taxes plus interest and penalties. Some states also have their own rules on how hygienists must be classified.
Malpractice and business insurance
Professional liability, tail coverage, general liability, property coverage on the equipment, employment practices liability, cyber coverage for patient records, and business overhead expense insurance are all deductible.
Your own disability income insurance is not a business deduction. Paying those premiums with after tax dollars is normally what keeps any benefit you receive from being taxed, so this is one to leave alone on purpose. Business overhead expense coverage works the other way: the premium is deductible and the benefit is taxable.
Practice software and claims systems
Your practice management system, imaging software, the e-claims clearinghouse, patient reminder and review platforms, phone system, website hosting, secure email, and the HIPAA compliant backup and IT support that protect the chart.
Keep the personal side out. If one phone line, internet connection, or laptop serves both the practice and the house, only the business share belongs on the return, and you need a reasonable basis for the split.
Merchant and patient financing fees
The percentage your card processor keeps, the fee third party patient financing companies deduct before funding you, collection agency commissions, and bank charges on the practice account are all deductible.
The processing fee is deductible. The insurance adjustment is not. When you write a fee down to the contracted rate, that write down is not a bad debt deduction, because on a cash basis the higher fee was never reported as income in the first place. The same goes for a patient balance you gave up on.
Rent, occupancy, and loan interest
Suite rent and CAM charges, utilities, water, nitrous and oxygen supply, alarm monitoring, janitorial, and the interest on your practice acquisition loan and equipment notes.
If you own the building through a separate LLC and rent the suite to your own practice, the rent has to be at a fair market rate supported by a written lease, and it gets reported on both sides, as an expense in the practice and as rental income to you. Setting that number by feel is how it gets challenged, and renting to your own business carries its own set of rules we will walk you through.
Mileage between offices and labs
Driving from the practice to the lab, between two locations you own, to a CE course, to the bank, or to a satellite office is business mileage. Keep a log with the date, destination, purpose, and miles.
Driving from home to your primary office is commuting and is not deductible, no matter how many models are in the back seat. The deduction uses either the IRS standard mileage rate published for that year or your actual vehicle costs, and we will tell you which one is available and better for your situation.
Once the practice consistently earns well beyond what you would pay an associate to cover your chair time, an S corp election can reduce self employment tax on part of the profit, but it brings payroll, a separate business return, and a reasonable compensation figure you have to be able to defend. We run your actual collections first and only suggest it when the math clears those costs.
What to bring us
You do not need all of it to start. Send what you have and your checklist shows what is still open.
- Your practice management collections report for the year, plus the year end ledger, so the return can be tied back to what actually came in
- Every Form 1099-NEC or 1099-MISC you received, and any Form 1099-K from your card processor or a patient financing company
- All twelve months of bank and credit card statements for the practice account, December included
- Dental lab invoices and year end statements
- Invoices, leases, and financing contracts for equipment bought or leased, with the date each item was installed and first used
- Payroll reports for the year: the annual summary, your Forms W-2 and W-3, your quarterly or annual federal payroll tax returns, and copies of any 1099s you issued to associates or traveling hygienists
- Declarations pages for malpractice, general liability, property, and cyber coverage
- Receipts for your dental license, DEA registration, society dues, CE courses, and course travel
- Your suite lease, and loan statements showing interest paid on the practice and equipment notes
- Your mileage log or app export if you drive between locations, and last year's tax return
What trips people up
Deducting insurance write-offs and unpaid patient balances as bad debt.
On a cash basis you are taxed on what you collected, so the adjustment is already out of your income and deducting it again would count it twice. We reconcile production to collections to adjustments so you can see where the money went, which is a management problem worth solving even though it is not a deduction.
Deducting the full monthly payment on a financed scanner, mill, or practice loan.
Split the payment into principal and interest. The equipment cost is deducted through depreciation or a first year election, and only the interest is a separate expense. Send us the loan documents and the amortization schedule with the invoice.
Buying equipment at the end of December for the deduction, then installing it in February.
The asset has to be placed in service, meaning installed and available for use, in the year you claim it. If a year end purchase matters to you, call us in November and we will plan the delivery and install date, not just the purchase date.
Claiming a home office while running a practice with a front office and a business desk.
The space has to be used regularly and exclusively for business, and when you have an office at the practice, that is normally your principal place of business. The claim can still work when you genuinely do the administrative work at home and have no other fixed location for it. We test it before we claim it, because this is a line the IRS reads closely.
Taking owner draws from an S corp without running a real payroll.
An S corp owner working chairside has to be on payroll at reasonable compensation and receive a Form W-2, and your health insurance premiums have to be run through that W-2 to be deducted properly. If you elected S corp status and never set up payroll, tell us now so we can look at it before the year closes.
What it costs
Our published list, the same one everyone sees. Prices marked "from" are starting points, and your exact number is confirmed in writing before any work begins.
$0 is due today. You pay when you sign, or you can have your fee come out of your refund, so it can be $0 out of pocket.
Questions we get from your trade
Do I file a Schedule C, or does my practice file its own return?+
If you are a sole proprietor or a single member LLC that has not elected corporate treatment, your practice income goes on Schedule C with your personal return, and self employment tax is figured on Schedule SE. A partnership or an S corp files its own return and sends you a Schedule K-1. If you are not sure which one you are, send us your formation paperwork and any IRS letters and we will tell you.
Can I write off a new cone beam unit or mill in the first year?+
It may be possible. Federal law provides first year expensing elections that allow a large or even full deduction on qualifying equipment, but they come with limits and the deduction can be capped by your business income. The machine also has to be installed and ready for use in the year you claim it. Taking the whole deduction at once is not automatically the best answer either, because spreading it out can be worth more if your income is climbing. We run it both ways and show you the difference.
Are my scrubs and lab coats deductible?+
Scrubs, lab coats, and protective gear you wear for infection control are a business expense, and so is laundering them. Regular clothing is not deductible even if you only ever wear it to the office, because it is suitable for everyday wear. Loupes and chairside protective eyewear are treated as equipment rather than clothing.
I am a W-2 associate at someone else's practice. Can I deduct my CE and loupes?+
Under current federal law, unreimbursed employee expenses are generally not deductible on your personal return. The better move is asking the practice to set up an accountable plan, so the practice takes the deduction and a properly documented reimbursement is not taxable income to you. If you also do 1099 work on the side, that side has its own Schedule C and its own deductions.
Does the qualified business income deduction apply to a dental practice?+
Under current law dentistry is treated as a specified service field, which means the deduction is available at lower income levels and is reduced or eliminated as income rises. Whether you get it, and how much, depends on your taxable income, the wages your business pays, and your filing status. We calculate it rather than assume it.
What about my dental school loans?+
Student loan interest may be deductible on your personal return, subject to income limits, and it is not a practice expense. If the practice pays your personal loan for you, that payment is generally compensation to you and gets taxed as such. Bring the year end interest statement from your servicer either way.
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