Whatever profession you’re a part of, tax laws and their myriad complexities can be daunting to navigate, but for U.S. dentists in particular, taxes throw up some very unique challenges and opportunities.
If you’re a U.S. based dentist who owns their own practice, your potential for earning a high income, added to the costs associated with starting your business, and deductions that are specific to the dental industry, makes working with experts in tax planning for dentists, a wise choice. Without their expert guidance, you may not be able to minimize your liabilities as effectively, or optimize your financial health.
Although there are several ways in which dentists can unlock extra savings for their practice, the Research and Development (R&D) Tax Credit is one that most dentists probably overlook. A federal incentive created to help reward innovation, this tax credit can be a powerful money-saving tool, and one that isn’t solely for laboratories or tech companies to take advantage of.
Dentists and R&D
A lot of dentists won’t necessarily see themselves as being innovators, or even as carrying out research and development, but trying new materials, improving processes, and exploring creative new ways to enhance your patients’ experience, are all forms of research and development.
How might your dental practice qualify?
Dentists are actually commanding innovators, even in the course of their daily work. Check out these common examples:
Testing new equipment or materials
If a dentist has ever tried out a new bonding agent, composite, or digital imaging tool in their practice, they’re being innovative!
Improving dental procedures
From refining workflows and improving protocols surrounding hygiene, to creating techniques that provide patients with a higher level of comfort, these are all ways of being innovative.
Adopting new technologies
Whether a dentist starts using digital scanning, or integrates 3D printing or CAD/CAM systems, these are all things that could qualify you for the R&D tax credit.
Providing tailored solutions
Improving patient outcomes can involve such things as experimenting with the customization of lab processes, software or setups of equipment. Sounds innovative? That’s because it is!
The benefits of the R&D tax credit for dental professionals
You can reduce your tax liability significantly by taking advantage of the R&D tax credit as a dentist, which frees up more resources within your practice.
For a lot of dentists, those extra resources could be used for the following:
- Reinvestments in the latest technology
- Expansion of services and patient offerings
- More flexibility and stability financially
Although the savings will vary from dentist to dentist, some have saved many thousands of dollars with this particular tax credit.
R&D tax credit and audit exposure
When dentist tax deductions or credits are used to reduce a dentist’s tax liability, this may well attract the attention of the IRS, who might choose to challenge it and submit you to an audit. But by working with a dental tax professional, you can take the necessary precautions to ensure that you’re legitimately eligible, and that everything is documented appropriately.
It’s not uncommon for dentists to overlook this particular tax credit – believing that it simply doesn’t apply to them – despite the level of innovation that’s typically involved in the industry as a whole. But by working with a dental tax expert, you may be able to explore this, and other credits and deductions that could give you and your practice, a competitive edge.
