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Tips for Dental Practices to Avoid Missing Tax Deductions

By Tabitha Tolliver

It is that time of year! You are likely gathering your business and personal information to provide to your tax preparer as we speak. Where do you start? What are you missing? Below are tips to help you avoid missing out on any 2019 tax deductions.

1. Maintain records in an appropriate accounting software, and reconcile your bank account each month.
Performing bank reconciliations will ensure that you have included all transactions that hit the bank account.

2. You still have time to contribute to a retirement plan for the practice.
In most cases, contributions to your business retirement plan for the 2019 plan year are deductible in 2019, even though the payment is made in 2020.

3. Did you purchase and place into service any new equipment, furniture, or fixtures for the practice in 2019?
If so, it is likely that you can fully deduct those purchases in the 2019 year with the use of accelerated depreciation methods Section 179 or Bonus Depreciation under Section 168(k). Learn more about Section 179 and Bonus Depreciation here.

4. Is your adjusted gross income less than $415,000 (married filing jointly) or $207,000 (all other taxpayers)?
If so, you may be able to take advantage of some or all of the S199A deduction. In 2018, the Tax Cuts and Jobs Act introduced the Section 199A Deduction for Qualified Business Income of Pass-through Entities. This deduction allows up to 20% of your pass-through entity income as an additional deduction. Learn more about qualified business income here.

5. Did you complete a build out of your practice in 2019?
You may consider having a cost segregation study performed. A cost segregation study could potentially allow you to depreciate some of the build out quicker to get more of a tax deduction now rather than later. Learn more about cost segregation studies here.

If you have questions about your tax planning or would like more information about any of the items mentioned above, please contact Tabitha Tolliver.

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