Tax season is upon us and the American Dental Association has advice for employee dentists and practice owners to help guide them through it.
Here are seven tips from the ADA to help dentists with filing their taxes:
1. Get documents together. In addition to the W-2, IRS Form #1099, IRS Form #1099 Interest and IRS Form #1099 Dividends, be sure to gather itemizations including stockbroker annual statements, crypto currency transactions and IRS Form #1098 mortgage statements.
2. Check receipts. Account for all financial transactions within the practice before filing. Make sure all receipts, disbursements, depreciation of equipment and amortization of goodwill are accounted for.
3. Be conscious of deductions. How a practice is set up as a taxing entity may determine if expenses such as continuing education or equipment purchases are deductible.
4. Don't forget about Health Savings Accounts. Health Savings Accounts are tax-exempt and are used to pay or reimburse medical expenses. Dentists who have one could qualify for a deduction.
5. Remember IRA contributions. In 2022, the total annual contributions one can make from traditional IRAs and Roth IRAs is capped at $6,000 for those under 50 and $7,000 for those 50 or older.
6. File for the employee retention tax credit. Dentists should file their amended payroll tax form using IRS Form #941X for the ERTC before the statute of limitations is up. Be cautious of tax credit firms claiming to specialize in these credits.
7. Think about using a dental accountant. This can be helpful for dentists who are filing as owners for the first time.