Ten Tips for Year-End Dental Tax Planning

Here I am at home today hoping I didn’t pick up the swine flu bug that we think my 12 yr old is just getting over. So what can I do? Write a blog of course! I thought I’d do a follow-up from my August blog about planning, now that we’re preparing for our round of year-end meetings.

Erik Parrish CPA wrote a great blog about ROTH IRA’s and the planning opportunities that are just around the corner in 2010. However, just before the corner is year-end 2009 and there’s plenty of time left to review where you are so far in 2009 and what you might want to do to finish out the year to position yourself in the best possible income tax “light”. Here are just a few ideas that we’ll be discussing with our clients prior to 12/31/09:

1. For LLC’s, PLLC’s and sole proprietors, is it time to elect to be taxed as an S-corp? C-corp?

2. For those w/o a practice retirement plan what options remain for 2009 and when do you need to make a decision? Will that plan still be the best option for 2010? If not, what does the client need to do as of Jan. 1st and when do we discuss a different retirement plan for 2010?

3. For those with 401k/PS plans, what are the minimum & maximum amounts you can contribute and what makes the most sense. For 2010 and the 401k portion should you do the traditional deferral or the ROTH deferral?

4. For those clients that started or purchased a practice in 2009, when do we need to decide what type of depreciation we take for 2009? Do we take as much deductions we can in 2009 or hold off and use the in future years where they may be more valuable?

5. For those considering ROTH conversions inn 2010, what can/should they do in 2009 to plan for that conversion? What about those clients I mention in #4 above?

6. For clients looking to expand soon and given the option of doing it in 2009 or 2010, which would be better?

7. Are the clients taking full advantage of all the “perks” that the practice of dentistry provides, how do those deductions “compare” with their peers?

8. How is 2009 looking compared to prior years, compared to your peers 2009 numbers? What about specific key performance indicators, how do they compare with prior years and your peers for 2009?

9. Take a look at any other issue that could impact their business income tax picture for 2009, 2010 and beyond.

10. Review their individual income tax projection for issues that may impact them in 2009, 2010 and beyond like other income, potential capital gains & losses, itemized deductions, rental or vacation properties, 2nd homes, other tax favored investments like oil/gas partnerships, annuities, etc.

Each client really is different and while there are many tax strategies that nearly all clients should consider, there are very specific strategies for each client based upon their individual situation. An example of that are children, those clients that have them may have some additional tax strategies they should consider vs. those clients without kids.

I stopped at 10, there are so many more. Every one of us should make sure we review our own situation to ensure you’re paying the least amount of tax under the law this year and in future years.

This first appeared on NewDocs.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

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