Sassetti LLC
Running a dental practice means juggling clinical care, business operations, staffing, and patient experience, leaving little room for tax planning. Yet the end of the year presents one of the best opportunities to strengthen your financial position, lower your tax bill, and set your practice up for success in 2025.
This guide walks dentists through the most important year-end financial moves to consider, based on common issues we see across dental practices, plus a few new regulatory updates affecting business owners this year.
1. Maximize Your Retirement Savings (and Lower Your Taxable Income)
Key reminders:
401(k) employee contributions must be funded through payroll by December 31.
For 2024, you may contribute:
→ $23,000 as an employee
→ + $7,500 more if age 50+
→ Employer match is on top of these limits.
• SIMPLE IRAs allow:
→ $16,000 employee contribution
→ + $3,500 catch-up (50+)
• If your 401(k) is maxed out, you may still benefit from a Traditional IRA, Backdoor Roth strategy, or additional employer contributions.
For practice-owner dentists, retirement plans are not just a savings tool—they’re one of the most powerful year-end tax strategies you have.
2. Explore Roth Conversions Before December 31
In a lower-income year, during maternity/paternity leave, or after a practice sale, converting pre-tax funds to a Roth IRA can create long-term tax advantages.
This is especially useful for dentists expecting higher future income or planning an early retirement.
3. Time-Sensitive Charitable Giving Strategies
Donations must be made by December 31 to count for the current tax year.
High-earning dentists should consider:
• Donor-Advised Funds (DAFs) for “deduction bunching”
• Donating appreciated securities to avoid capital gains
• Strategic charitable planning if you expect unusually high income this year (e.g., selling part of your practice)
4. Review and Fund 529 Plans
If you’re saving for your children’s education:
• Contributions may be deductible on your state return.
• Many states require contributions by year-end, not by tax filing.
• Contributions over $18,000 per parent, per child may trigger gift tax reporting—talk to your CPA first.
5. Confirm Your HSA and Medical Deductions
If your family is covered by an HSA-eligible health plan:
• 2024 limits are $4,150 (self) and $8,300 (family)
• An additional $1,000 catch-up contribution applies if you’re 55+
• HSA contributions are permitted up to the tax filing date, but year-end is the best time to verify funding.
If you expect procedures—personal or family—consider completing them in 2024 to maximize medical deductions.
6. Required Minimum Distributions (RMDs)
If you or your spouse is 72+ (or 73 depending on birth year), confirm that all RMDs have been taken from pre-tax accounts to avoid penalties.
7. Consider Tax-Loss Harvesting in Investment Accounts
For dentists with taxable brokerage accounts:
• Selling loss positions could offset realized gains
• Excess losses can offset up to $3,000 of ordinary income
• Unused losses carry forward indefinitely
This should be coordinated with your financial advisor to avoid wash-sale issues.
Practice-Specific Year-End Planning for Dentists
8. Decide Whether to Invest in New Equipment
Dental equipment purchases can significantly impact your tax bill.
Under Section 179, you may be able to deduct the full cost of qualifying equipment placed in service by year-end.
Considerations should include:
• Is the equipment truly needed for patient care, growth, or efficiency?
• Will the purchase strain cash flow?
• Are you planning renovations or adding operatories soon?
• Does accelerating depreciation make sense this year—or would future deductions be more valuable?
Avoid buying equipment only for the tax benefit—let practice strategy lead the decision.
9. Review Q4 Estimated Tax Payments
This is especially important if:
• Your practice had higher collections this year
• You added associates
• Hygiene production increased
• You purchased a practice or sold ownership shares
Underpaid estimates can lead to penalties, so reviewing income trends before 12/31 is essential.
10. Consider Paying Family Members Through Payroll
For many dental practices, paying a spouse or children for legitimate work can create tax-efficient opportunities.
Examples:
• A spouse helping with bookkeeping, marketing, or HR
• Children assisting with filing, sterilization room prep, social media, or mailers
Key guidelines:
• Kids can earn up to $14,600 without owing federal taxes
• Pay spouses enough to fund their retirement plan
• Keep documentation that proves the work performed
• Wages must be reasonable and tied to real duties
Done correctly, this strategy shifts taxable income from the dentist to lower-bracket family members.
11. Monitor Your Income Relative to Key Phase-Outs
Most credits, deductions, and the Qualified Business Income Deduction (QBID) phase out at higher income levels.
For 2024:
• QBID phaseout begins around $191,951 (single) or $383,901 (MFJ)
• It is fully phased out at $241,950 (single) or $483,900 (MFJ)
Strategic planning in Q4—such as retirement contributions, equipment purchases, or timing certain expenses—can help ensure you don’t lose these valuable deductions.
12. New Requirement for 2024: Beneficial Ownership Information (BOI) Filing
Beginning January 1, 2024, most small businesses—including dental practices organized as PLLCs, LLCs, S-Corps, or C-Corps—must file a BOI Report with FinCEN.
Deadline:
• January 1, 2025 for existing entities
• Within 90 days of formation for new entities
This filing discloses individuals with ownership or substantial control of your practice.
File here: https://www.fincen.gov/boi
Final Thoughts
Dentists face a unique blend of clinical, business, and financial challenges. The end of the year is your chance to take control of your tax picture, strengthen your practice, and position yourself for a more profitable 2025.
If you’d like help reviewing these strategies, planning equipment purchases, or modeling year-end tax scenarios, our team is here to guide you.
Author: Anna Kross
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