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I had this odd late night thought recently: dentists are some of the most precise people in the world, but their tax returns often look like they were rushed in the parking lot. Have you ever looked at your tax bill, felt your stomach drop, and thought, “There has to be something I am missing here”?

Here is the short answer: most dental practice owners can get immediate tax savings by fixing three things right away: how they pay themselves (entity and salary mix), how they treat equipment and buildout costs, and how they handle retirement and fringe benefits. If you want a starting point without overcomplicating it, those three areas often give the fastest wins and point you toward honest, legal savings. A lot of what I am about to walk through is exactly what a specialist CPA promoting Immediate tax savings for dental practice owners would quietly implement behind the scenes.

Why dental practices overpay taxes so often

Dental practices have a strange mix of traits: high revenue, high fixed costs, and a lot of equipment. That mix can be great for tax planning. But in real life many dentists are:

– Paying themselves only as W-2 employee dentists for too long
– Letting their accountant “play it safe” and avoid elections and strategies that need a bit of thought
– Treating taxes as an April problem instead of a year-round part of running the practice

The result is this pattern I have seen again and again:

You collect strong production, work late, manage staff problems, then lose a five-figure chunk to taxes that you did not really need to pay.

I will go through this in a practical way, grounded in what usually works first, not in what sounds clever on a tax podcast.

Fast moves that can change this year’s tax bill

Let me stay blunt. If you just want theory, you will hate this section. If you want to move money away from the IRS this year, this is where you should focus time.

1. Get your entity and compensation mix fixed

This is where dentists either save a lot or waste a lot. The big question is: how is the practice taxed, and how do you take money out?

The common setups you see:

Many dental practices work best as an S-Corp or LLC taxed as an S-Corp, but not always. If you are already an S-Corp, the next question is:

Are you paying yourself a “reasonable salary” that is not too low and not too high?

If your salary is way too high compared to profit, you are overspending on payroll taxes. If it is unrealistically low, you are asking for trouble in an audit. The right amount depends on your role, production, and how reliant the practice is on your personal work.

For example, look at this simple scenario:

You still pay income tax on the whole $500,000, but you pay payroll tax only on the salary. If your salary is inflated, you are burning money.

For many dental practice owners, the fastest legal tax savings come from setting S-Corp salary correctly and then sticking to it with clean payroll records.

I know this is not glamorous. It is just a blend of tax law and common sense. But the savings often hit five figures each year.

2. Use Section 179 and bonus depreciation correctly

Dentistry is equipment heavy. Chairs, CBCT, CAD/CAM, digital scanners, handpieces, computers, even some software. Many of these items qualify for accelerated expensing.

The two big tools:

– Section 179 expensing
– Bonus depreciation

Instead of depreciating equipment over several years, you might be able to expense a large portion in the year you place it in service. That creates “immediate” savings by pulling deductions into the current year.

But here is where nuance matters a bit:

– If you are already in a low tax year, you might not want to stack every possible deduction now
– If next year you will be in a much higher bracket, pushing some deductions out can make sense

Most dentists do the opposite. They throw deductions at random years and hope for the best.

For a new chair costing $15,000, for instance, you could:

– Take full Section 179 this year
– Use bonus depreciation
– Or spread it across the standard depreciation life

There is no single ideal choice for everyone. But if your current year looks like a high-profit year, there is a good argument for accelerating.

3. Clean up what is already in your books

Before chasing advanced methods, ask a simple question:

Is your bookkeeping clean enough to support the deductions you already take?

I have seen:

– Supplies coded as “misc expense” with no detail
– Meals dumped into one giant bucket, no notes on business purpose
– Home office costs never claimed, even when used regularly
– Car expenses done casually with guesses, not mileage records

Cleaning this up can give direct savings because you can claim what you already legitimately pay for, without fear of trouble later.

Accurate records are not about being a perfectionist; they are about giving yourself the confidence to claim everything you are allowed.

If you cannot prove a deduction, it is fragile. If your system is tight, your deductions feel calm and defensible.

Specific tax moves that often help dentists right away

Now let us get more concrete and stay practical. I want to walk through areas where many dental practice owners can see near-term impact. Some require setup before year-end, others can be handled at filing time.

4. Retirement plans that actually fit a dental practice

Dentists often want tax savings now but also like the idea of building real wealth. Retirement plans do both. The art is picking a plan that works for your staff mix and your income level.

Common options:

• Simple IRA
• 401(k) with or without profit sharing
• Safe harbor 401(k)
• Cash balance plan (for very high earners)

For many mature practices, a combo of a 401(k) with profit sharing, or a 401(k) plus a cash balance plan, can shelter a large chunk of income.

A rough range:

– A solo or small team could often defer tens of thousands each year
– A larger practice with an older owner and younger staff might justify a cash balance plan that pushes six figures into retirement with strong current-year tax savings

There are tradeoffs. You need to contribute something for staff. You take on admin work and some required contributions. But when your tax bracket climbs, it starts to feel quite rational.

The “immediate” part here is that contributions reduce taxable income for the year you make them. You are basically moving money from your checking account into a protected bucket while lowering your tax bill.

5. Section 199A and how your practice is structured

Section 199A is the qualified business income deduction, often called the 20 percent deduction on pass-through income. Dentistry is in the group of “specified service” trades, which means high-income dentists start losing this deduction as income rises.

Two points here:

1. If your taxable income is under the phase-out threshold, your practice income might qualify for a meaningful deduction
2. If you are near the phase-out, smart use of retirement contributions, entity structure, and timing of income and expenses can keep you under the cliff

This is not about games. It is about understanding how your decisions interact with the formula.

For example, if you are just barely over the phase-out level, adding a retirement plan or more aggressive expensing may drop you back into a range where you get back much of the deduction. The net effect can be more savings than the contribution alone.

6. Smart use of family and staff in the practice

Dentists often have spouses or older children who help unofficially in the practice. Phones, social media, cleaning, small admin projects. If they are doing real work, you can often pay them a fair wage and shift income into lower tax brackets.

Key ideas:

• Spouse doing real admin work can receive a salary and also join retirement plans
• Teen children helping with filing, marketing, or cleaning can be paid and use their low bracket
• Payments must be reasonable and supported by timesheets and actual work

This is one area where people either go too small (no pay at all, unpaid labor) or too aggressive (paying a child an adult salary for almost no work). The middle ground is both legal and helpful.

7. Choosing expense categories wisely

Some practice owners let QuickBooks decide categories. That is not a plan.

Better tax results come when you think through where your money is going and how the IRS sees those costs. For example:

– CE courses: often fully deductible if tied to maintaining or improving skills
– Travel linked to CE: often deductible, but you need records of purpose, location, dates
– Meals: many are only partly deductible, and some after 2020 rules change their treatment
– Uniforms and protective gear: often deductible if required and not adaptable as normal clothing
– Staff events: can be fully deductible if structured properly

If you do not track these items separately, you cannot easily review them with a CPA and adjust during the year. You are stuck with “misc expense” lines that nobody wants to touch.

8. Handling cars used for the practice

This topic tends to cause arguments. Some dentists want the practice to buy them a luxury vehicle and call it a day. Others avoid any deduction because they fear doing it wrong.

The reality:

– If you use a car for practice errands, outreach, supply runs, or work at multiple locations, there may be a valid deduction
– The two main methods are standard mileage rate or actual expenses
– You need a log, or at least a reasonable reconstruction, of business miles

For some owners, especially those working across several offices or who travel often to specialists or labs, this can be a fair chunk of deductions each year. For others who walk to work and never drive for the practice, it may not matter.

Timing strategies that change your tax year quickly

Not every tax move is about what you do. Some are about when you do it.

9. Shifting income and expenses between years

Dental practices on cash basis accounting can often control timing more than they think. A few examples:

– Prepaying certain expenses near year-end if allowed by your method and contracts
– Delaying or advancing large equipment purchases
– Adjusting when you send big batches of patient statements (affects collections timing)
– Reviewing when you take distributions or bonuses from the practice

This is not about fake entries. It is about being strategic with real events. If you know this year will be your highest income year for a while, you might speed up deductible spending and slow down income collection a bit inside what is legal.

If next year you expect to sell a share of the practice or bring in an associate who will change your income, you might plan the opposite.

10. Mid-year reviews instead of last-minute panic

One pattern that hurts dentists is the April surprise:

– No tax projections
– No mid-year check-in
– No look at how your income is trending

Then, when the return is prepared, you see an ugly number and feel stuck.

A better rhythm:

• Review your books each month or at least quarterly
• Do a tax projection mid-year and again near year-end
• Ask “What can we still adjust this year?” instead of “What happened to me?”

This process itself does not magically cut your tax. It simply gives you time to put the other strategies in place while they still matter.

Realistic examples of immediate tax savings

It sometimes helps to walk through not-perfect, slightly messy examples that look like real life.

Example 1: Solo dentist with high production and no retirement plan

Profile:

– Age 42
– S-Corp practice
– Profit before owner pay: $550,000
– Owner salary: $350,000
– No retirement plan in place

Problems:

– Salary probably higher than needed
– No current year retirement deductions
– Minimal Section 179 usage despite recent equipment purchases

Possible immediate actions:

– Revisit salary level based on regional dentist salary data and role in the practice
– Set up a 401(k) with profit sharing for this year
– Review equipment purchases and apply Section 179 or bonus where helpful
– Check if they are missing any valid practice expenses like CE, car use, and home office portion

Result can easily be:

– Lower payroll tax on a more reasonable salary
– Tens of thousands placed into retirement with current-year deductions
– Additional depreciation deductions that were not previously claimed

Is every case this clean? Of course not. But this sort of rework, done carefully, often leads to both lower taxes and a more structured practice.

Example 2: Married dentist with spouse helping in the office

Profile:

– Age 50
– Practice profit: $400,000
– Dentist salary: $240,000
– Spouse works weekly at front desk but is not on payroll
– Small team of assistants and hygienists

Issues:

– Spouse doing genuine work without pay
– Retirement contributions only for dentist, not structured for team and spouse
– No clear tracking of spouse duties or hours

Possible adjustments:

– Put spouse on payroll at a fair hourly rate for admin work
– Allow spouse to participate in the practice retirement plan
– Document duties and hours so IRS would accept the arrangement

This shifts some income to the spouse and may reduce the family tax rate while also growing retirement savings. Again, this only works if the work is real and properly documented.

Example 3: Multi-location dentist with heavy travel and CE

Profile:

– Runs 3 locations
– Drives often between offices and to CE events
– Uses personal card for CE and travel, then forgets to submit receipts
– Bookkeeping lists many things as “owner draw”

Improvements:

– Set up a simple documentation system for CE and related travel
– Create separate expense categories for CE, travel, and car use
– Reconstruct some of last year’s legitimate expenses if records exist

This does not feel fancy, but the tax effect can be very real. Many owners are already paying for these costs; they just do not consistently claim them.

Where dental practice owners go too aggressive

So far I have focused on moves that commonly work and do not require magical thinking. Let me push back on some approaches that raise risk.

Overstated home office use

Some dentists claim very large home office deductions even when:

– They spend almost all work time at the practice
– They have a proper business office in the dental building
– The home “office” is really a shared family space

If you manage your practice from home regularly, keep records and use a reasonable area. If your use is light, keep the deduction small or skip it. An extreme number for home office usually stands out.

Trying to make personal items look like practice deductions

You might have seen or heard of people trying to deduct:

– Purely personal travel as “business research”
– Family vacations with one short CE course as mostly business
– Expensive clothing as uniforms when they are really normal clothes

These areas can quickly shift from smart planning to weak justification. If you would never do the activity without the personal side, be careful calling all of it a business cost.

Vehicles used almost entirely for personal life

If the practice buys a luxury SUV that barely ever goes to the office, the tax story is fragile. You may still get some deduction for real business use, but calling it 90 percent business when it sits in your home driveway most of the time is hard to defend.

This does not mean dentists cannot use large vehicle deductions. It means the usage pattern has to match the tax claim.

Why your website niche and student founders should care about this

You might be thinking: “My interest is student startups and campus trends, so why push tax topics for dentists?”

I see two reasons.

First, more dental students are planning to own practices earlier in their careers. They are not just joining corporate dentistry forever. They are acting more like founders. They think about:

– Ownership structure
– Debt load
– Hiring and culture
– Brand and patient experience

Taxes are part of that picture. Waiting ten years to care about tax planning simply leaves money on the table.

Second, the core ideas here generalize to other professional practices that many students may start later: mental health clinics, PT offices, med spas, small specialty clinics. The details differ, but the big themes carry over:

– Entity choice matters
– Timing of income and expenses matters
– Retirement plans can combine wealth building with tax relief
– Clean books are not a luxury; they are part of smart ownership

In other words, the dentist tax story is really just a very concrete version of “how a high-skill, owner-operator can keep more of what they earn.”

Questions to ask your CPA right now

If you are a dental practice owner reading this and feel a bit exposed, that is fine. The goal is not to make you an accountant. The goal is to help you ask better questions.

Here are some you can take to your CPA:

• Is my current entity type still the best choice for my profit level and growth plans?
• How did you arrive at my current W-2 salary number, and what data did you use to support it?
• Are we using Section 179 and bonus depreciation in a way that fits my income swings, or are we just defaulting one way every year?
• What retirement plan structure would allow me to defer more while still treating staff fairly?
• Am I missing any deductions because of poor bookkeeping categories or weak documentation?
• Do we run tax projections during the year, or do we only look backward at filing time?

If your CPA cannot give clear, calm answers, or seems annoyed by these questions, that tells you something too.

Common myths that hold dentists back

Let me end by pushing against a few beliefs that show up a lot in conversations with practice owners.

“My income is what it is. There is not much I can do.”

Federal and state law set the rules, but you decide how closely you interact with those rules. Your entity, how you pay yourself, how you time purchases, and whether you bother with retirement plans all shape your final tax bill more than many people admit.

“Tax planning is just for huge practices.”

Small solo practices often have more flexibility. You do not need a million in profit to make a 401(k), S-Corp salary tuning, and Section 179 expensing matter. If anything, earlier in your career is a good time to build habits that scale with you.

“If something saves a lot of tax, it must be risky.”

Sometimes that is true. But not always. You can gain real savings just by matching your structure to how you work, honoring your documentation, and using the incentives written into the code. You do not need exotic schemes to see meaningful differences.

Closing thoughts, and one last practical Q&A

I want to keep this grounded in real decisions, not ideals. So here is a simple question that dentists often ask, followed by a direct answer.

Q: If I can only focus on three things this year to get immediate tax savings, what should they be?

A:

1. Review and reset your entity and salary mix. If you are not using an S-Corp when it fits, or your S-Corp salary is out of line, that is step one.
2. Set up or improve a retirement plan that matches your income and staff profile. A better 401(k) or a combined structure can move a lot of money while lowering this year’s tax.
3. Audit your recent spending for missed deductions in equipment, CE, travel, and family help in the practice, while tightening your recordkeeping so you can take everything you are allowed without stress.

If you do those three honestly and with good advice, you usually see clear movement in one tax year and even more in the years that follow. The longer you wait, the more cash slips by untargeted.

So the real question is not “Can I get immediate tax savings this year?” It is “Am I willing to treat my practice finances with the same care I give a complex procedure in the chair?”