Top 3 Reasons to Take Advantage of Tax Deductions For Dentists 
Published
 - December 27th, 2022

Everything You Need to Know About Section 179

The Tax Cuts and Jobs Act was one of the most significant iterations of the tax code in over three decades. The American Dental Association (ADA) successfully argued in 2017 that dental practices should be able to utilize tax deductions proposed in the act. 

As a result, Section 179 of the Internal Revenue Service Code now offers a full tax deduction against investments that dentists may have made on equipment or software. 

This applies to lease, finance, or purchase of new or used business equipment, and as a tax incentive, it’s a bonus for all small businesses, including dental practices. It also has significance for a dentist’s financial planning as there’s now monetary impetus for upgrades and investments. 

Here are the top three reasons why tax deductions for dentists are beneficial to industry professionals. 

More Cost Savings

A dental practice faces the same challenges that any other small business faces. Operational costs, from staff salaries to utility bills to equipment maintenance to real estate rent, all climb up slowly but steadily. More importantly, there’s only so much you can do to cut your expenditure. When dentists take advantage of Section 179, they can now save significant amounts of money in tax deductions. 

Higher Investment Threshold

There are many reasons to upgrade technology and dated equipment, and chief among them is a higher investment threshold. For dentists, several months to year’s end is the right time to invest in the latest equipment, upgrade your existing systems, install the latest software, or even get brand new furniture because now you’ll be able to claim 100% deductions on the investment. The deduction now stands at $1 million, while the equipment purchase limit has been extended to $2.5 million. 

Better Infrastructure & Improved Patient Experience

One of the most beneficial aspects of Section 179 is that along with technology, equipment, and software, tax deductions can be claimed on improvements to infrastructure. These include security and alarm services, air conditioning, ventilation and heating, roofs, systems for fire protection, and (as mentioned above) furniture. Better infrastructure means heightened systems of care and quicker word-of-mouth patient referrals for the dental practice.  

Tax preparations & Section 179

One of the goals of every practice should be building and maintaining your working capital. Being a business-savvy dentist will help to preserve funds and set you apart from other dentists.

Considering these three reasons, Section 179 is more than a mere tax deduction, it’s an investment for upgrades. In fact, if you’re managing a financially-sound dental practice, then this is something you must explore. 

Just be mindful to not use Section 179 deductions to lower your income below zero, indicating a loss. In essence, it’s a trap for dentists using S Corporations because they don’t have enough equity to realize the advantages of writing-off equipment.

So bookmark this article, and get your gears in line. To learn more about which equipment is best to purchase, including financing options, reach out to the experts at Dental Whale by visiting https://www.dentalwhale.com/contact

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