Tax Deductible Expenses for Dentists

One of the many financial challenges recent grads face is understanding the complexity of tax deductible business expenses. These tax deductible expenses are available to associate dentists paid as 1099 independent contractors (ICs). You must incur allowable business expenses and complete IRS Schedule C to deduct from gross income. The Tax Cuts and Jobs Act of 2017 eliminated unreimbursed business expenses paid by W2 associates.

The following list is not exhaustive, but intended to provide some guidance. It is also intended for associate dentists, not owner dentists (although there is overlap). The IRS requires that you maintain comprehensive records to support your deductions in the event of an IRS audit (happy days).

CE Courses – You can deduct your expenses for seminars, classes or conventions.
License Fees – State, DEA, radiology, etc. are allowable deductions.
Malpractice Insurance
Association Dues – CDA, ADA, local and specialty organizations are deductible.
Dental Supplies & Materials – what you’ve paid out of pocket not reimbursed by your employer.
Dental Equipment – Usually depreciated as prescribed by the IRS or deduct as Section 179, whichever is more tax advantageous.
Lab Fees - if paid out of pocket and not reimbursed by your employer.
Health Insurance Premiums – Straight forward when compensated as an IC, but more complicated when you’re a W2.
Professional Journal & Trade Magazine Subscriptions Fees
Lab Coats and Uniforms
Travel Business Related – Are deductible if travel is to attend conference, convention, or CE coursework.
Business Meals:

You can deduct meal expenses only if they are both ordinary and necessary (not lavish or extravagant) and meet either one of the following two tests:

Directly-Related test
Associated test

Please visit the IRS link for all the fun details: https://www.irs.gov/publications/p463/ch02.html

You cannot deduct personal meals taken during the course of a work day. Please consult your tax adviser.

Automobile Expenses – Complicated area. Please consult your tax adviser.

Again, not exhaustive, but a good starting point. In consultation with your tax adviser (which could be me), you must maximize your allowable deductions to minimize your tax liability.

Best,

Sergio