Year-End Tax Strategies for Dentists

Most dentists can save thousands, perhaps tens of thousands of dollars in taxes, by taking decisive steps before year-end. With major federal tax reform in the works, for the first time since 1986, the opportunities in these final days of 2017 really are a once-in-a-generation occurence.

There is no federal tax bracket specifically for dentists, but there are year-end tax strategies that can be particularly favorable to members of our profession. This is even more true now with the possibility of our country’s first meaningful tax reform since 1986.

As a group, dentists – and especially those whose practices incorporate oral sedation – fall into the nation’s uppermost tax brackets. Ordinarily, this fact is one that evokes groans from oral health professionals at this time of year, as they tally up their income and calculate the larger-than-ever tax bill that awaits them come April 15th.

But this year, for top-performing dentists, the groans may very well morph into chortles. Played wisely, successful dentists could very well see their 2019 tax bill – the one for income earned beginning on January 1, 2018 – decline by tens of thousands of dollars.

In a conventional year, one when no meaningful tax reform is on the horizon, the tried-and-true recommendation of most tax strategists is to push forward into the New Year as much income as possible.

There are a variety of strategies for accomplishing this, but none more common than purchasing and prepaying in late December products, services, courses, equipment, and other valid business necessities, effectively reducing your current-year adjusted gross income.

According to The Washington Post, which earlier this month published a table illustrating the impact of Congress’s tax reform, 84% of those earning between $100,000 and $200,000; 86% of those earning between $200,000 and $500,000; and 92% of those earning between $500,000 and $1,000,000, will get a tax cut in 2019 (for 2018). That pretty much covers every dentist reading this article.

Assuming your income will be exactly the same for all of 2018 as has been for 2017, dentists in these three upper brackets stand to save thousands, if not tens of thousands of dollars, by postponing until 2018 as much of this year’s adjusted gross income into 2018. Obviously, if your income grows next year – which is the aim of most dentists – you’ll have to pay additional taxes on the growth, but at least it will be at a reduced tax rate.

Consult Your Tax Advisor

Keep in mind that the final terms of the new tax reform bill, which President Trump has promised to sign, are still being negotiated between the House and the Senate, and include a variety of provisions beyond tax rates that may, or may not, be favorable to dentists. Moreover, there are no one-size-fits-all tax strategies, so before you proceed to implement any advice in this newsletter – or any other publication – it is always wise to consult your tax advisor.

In fact, Rob Eagleston, a financial planner and wealth advisor to many successful dentists, says one of the expenses he regularly recommends that oral health professionals indulge in before year’s end is to schedule a strategy session with their tax advisor.

“I tell clients regularly that you should have at least a minimum of a second meeting with your accountant where the whole purpose and intent is to plan and consider both your business and your personal financial situation and the tax code, and how that plays together,” says Eagleston, who along with his brother John, head Eagleston Financial Group in Mesa, Arizona.

“The really smart clients will jump onboard now and carefully evaluate the year that’s ending and look forward to the year coming, and put themselves in a position to take advantage of every opportunity,” Eagleston adds.

[You can hear our full interview with Rob Eagleston in this week’s edition of the Good News Dentistry™ podcast. Click here.]

As the nation’s leading provider of sedation and advanced dental continuing education courses, DOCS Education offers an array of quality classes in February, March, and May 2018 that will qualify most dentists who register and pay for them now, a substantial 2017 tax savings. In fact, even transportation and hotel fees, if paid in advance for our 2018 courses, may be deductible in 2017 (again, double-check this with your own tax advisor).

A Troika of Noteworthy Opportunities

Three particularly noteworthy and popular DOCS Education courses to consider are:

• Sedation Certification: This is our top-of-the-line sedation course which qualifies our members to offer moderate enteral and parenteral sedation in all 50 states, now and for the foreseeable future. Not only will you and your team be far more efficient — and provide many new benefits to your patients — on completion of this training, you'll also eliminate one of the powerful roadblocks that the most restrictive regulators rely on to limit who you treat and how you help your patients.
• Master Series — Advanced Sedation: Presented by world-renowned instructors, Drs. Anthony Feck and Leslie Fang, this compelling course covers the safe sedation treatment of individuals suffering from chronic medical issues, one of the fastest-growing segments of the patient population.
• Master Series — Dental Sleep Medicine: Obstructive Sleep Apnea is epidemic and getting worse with an aging, obese population. Adding dental sleep medicine to your practice provides the opportunity to help your existing patients in new ways, and to expand your practice to an entirely new group of patients.

Be sure to visit our website to view the available dates and locations for these courses and all of our outstanding continuing education opportunities.

While doing everything within the law to save on taxes is a worthwhile goal, discovering fresh opportunities to grow your practice and the grateful patients whom you serve is even more fulfilling. The fact that so many DOCS Education members and course graduates are in the nation’s top tax brackets is a testament to the dedication they provide their patients and communities, and the compensation they earn in return for their hard work and excellence.

Indeed, if we were to chart the net incomes of those dentists who regularly participate in our continuing education programs, the graph would resemble a staircase where each step up in earnings coincides with the completion of one of our outstanding courses.

More importantly, each stair represents more patients successfully treated, often including men, women, and children who – without the caring, dedicated, talents of our graduates – might not even see a dentist.

This New Year, 2018, promises to be another filled with opportunities to rededicate ourselves to dentistry – not just as our profession, but also as our calling.

[Editor’s Note: On the DOCS Education website, you’ll find an array of top quality dental products and equipment, including AEDs, monitors, airway management tools and supplies, and clinical references, that you may wish to consider purchasing before year-end to decrease your 2017 tax bill.]