Last Minute Income Tax Tips for Dentists, Part 1: Get Ready for Tax Season!

Tax season is upon us, friends, and it’s time to send in all your receipts, reports, and forms to your CPA. Before you finalize your return or schedule your extension, we have some last minute tax tips that may help make your tax season, and the rest of the year, less stressful and slightly more profitable. Here, we cover two of the more recent changes to tax filing and formatting you should be aware of.

New 1040

The format and layout for the 1040 changed. The previous six schedules have been reduced to three to allow for more streamlined processing. Schedule 1, Additional Income, is mostly the same. Schedule 2, Additional Taxes, is much longer but combines the previous Schedules 2 and 4. And Schedule 3, Credits and Payments, combines Schedules 3 and 5.

Changes to 1099 Reporting

If your practice made payments to vendors or non-employees in 2019, some of the rules for 1099s changed. From the Naden/Lean blog:

Going forward, employers who make payments of at least $600 throughout the year to a non-employee individual, partnership, estate, or in some cases a corporation must use Form 1099-NEC. The due date is January 31, 2020. Employers making other payments should continue to use Form 1099-MISC and use the due date of March 31, 2020 to file.

Tax forms merely reflect tax law, however. And you to make tax law work better for you, it helps to ask the right questions. Questions to ask your dental CPA to make sure you’re getting the most out of this tax season:

  • Am I getting all the deductions I qualify for?
    Is my dental practice the best entity type for my situation and personal tax goals?
  • How can I increase after-tax money?

What works best for one dentist may not be an appropriate tax strategy for another. Call or email us with your questions.