The more you earn the more you owe making it increasingly crucial to maximize the deductions and credits you can claim to retain more of your hard earned income. 

Here’s a list of eight underutilized deductions dentists need to know to lower your tax burden. Every year tax laws and income limits change here’s latest updates for the 2022 tax year of underutilized tax deductions. 

Small Business 

Jumping right into the first one, if you own your own practice then you should know of Section 179 a deduction for small business expenses. 

This includes dental and it allows up to 100% deduction of the purchase price of qualifying business purchases. Examples of qualifying purchases include software, computers, furniture, HVAC, dental equipment, and more.

State Sales Tax

This is a relatively new deduction and it may be to your benefit to keep track of all that you have paid out in state sales tax to deduct from your federal returns.

Charity

Deducting charitable contributions is not new, but what has changed is contribution limits have increased from 50% to 60% of your adjusted gross income. Also, it’s not just money given that is deductible, but donated services, travel expenses, and some sponsorships may count as a charitable deduction too.

Job Hunting

If you spent money searching for work, the expenses incurred from traveling and associated expenses applying can all be included on your itemized deductions.

Child Care Credit

Child care is a hefty expense that you may be able to take a $6000 child care credit, the costs incurred during summer can also be deducted.



Child Tax Credit

If you have children you likely can claim a $2000 child tax credit per kid under the age of 17. The beauty of a credit is it directly reduces the amount of taxes you owe dollar for dollar, whereas a deduction lowers your taxable income.

Moving Expenses

Moving expenses can be deducted in two ways. If you relocated a business these expenses can be deducted from your business taxes. Your personal expenses related to moving can be deducted if they qualify by the criteria set by the IRS, if it is more than a 50 mile move and if you work full time for at least the first year. Full time is whatever is considered normal for your career. In dentistry a 4 day week is normal for your profession. 

Property Deductions

You likely already know mortgage interest is deductible, but it’s a deduction that’s available for all homes you may own, not just your primary residence. It also includes interest on equity credit lines, as long as your loan doesn't exceed the fair market value of your home. There are income limits to be able to qualify for this deduction.

Lower Your Tax Bill

Not all these may apply to you, but these are often overlooked tax deductions that can lower your tax bill. It is good to have an awareness of tax laws so you know what you need to keep a good record of. We are here to help you get the most deductions, we specialize in financial planning and tax advisory for health professionals.