Running a dental practice comes with unique financial complexities—high overhead, equipment costs, and fluctuating income. That’s why proactive tax planning is essential for dentists who want to reduce tax liability and improve cash flow..
1. Choose the Right Entity Structure
S Corporations or partnerships may offer tax advantages over sole proprietorships by reducing self-employment tax and enabling income splitting.
2. Maximize Depreciation Deductions
Dental equipment and office renovations may qualify for Section 179 or bonus depreciation.
3. Track and Deduct Business Expenses
Common deductions for dentists include CE courses, dental association dues, professional liability insurance, and even a portion of your home office if you manage admin work from home.
4. Plan for Quarterly Estimated Taxes
Dentists often have income spikes throughout the year. Avoid penalties by adjusting estimated tax payments based on cash flow and tax projections.
5. Leverage Retirement Contributions
A well-designed 401(k), SEP IRA, or defined benefit plan allows dentists to defer large amounts of income, especially useful for high earners nearing retirement.