IRS Phasing Out Paper Checks on September 30

In March 2025, the White House issued an Executive Order on Modernizing Payments to and from America’s Bank Account (essentially the IRS’s system for payments and refunds). As part of this effort, the U.S. Treasury announced that, starting September 30, 2025, it will no longer send paper checks for IRS payments. From that date forward, refunds and other federal tax payments will only be issued electronically.

For dental practice owners, this may not feel like a big shift since you’re probably already paying and receiving funds electronically. However, it’s important to understand what’s happening and how to help family members who may still rely on paper checks prepare for the change.

Why the Change Is Happening

This particular shift is part of a broader government initiative to modernize payments. Electronic transfers are faster, more secure, and more cost-effective than paper checks, and they also reduce the risk of mail theft, fraud, or lost payments, something that has grown in recent years.

What It Means for You

  • Refunds: If you typically get your IRS refund by check, you’ll need to provide direct deposit details or another electronic option going forward.
  • Payments: While details are still emerging, the IRS is expected to encourage or even require more electronic tax payments. 
  • Exceptions: Some taxpayers, such as individuals without bank accounts or those facing specific hardships, may still be able to request paper checks, but these allowances will be rare.

Why We’re Sharing This

While this change may not affect you directly, we want to ensure everyone is as informed as possible. You may have family members, especially older relatives, who still depend on paper checks. For them, this shift could feel like a big adjustment. Passing along this information now gives them time to prepare before the next tax season and allows them to set up direct deposit or look into alternatives like prepaid debit cards.

What To Do Now

  • Confirm your bank information with the IRS if you normally get refunds. You can confirm or update your bank account information through secure IRS tools like Direct Pay, EFTPS, and the IRS Online Account.
  • Encourage family members who still depend on paper checks to talk to their bank or financial advisor about electronic options.
  • Stay informed: The IRS is expected to release additional guidance on payment acceptance and exceptions over the coming days. We will do our best to keep you updated as new information is released.

Note For Those Yet to File Their 2024 Tax Return

If you have not yet filed your 2024 tax return, but plan to before the October 15 deadline, keep in mind that the new rules will apply to you. Beginning September 30, 2025, IRS refunds will only be issued electronically, and any balance due will be paid the same way. If you don’t provide valid banking information for your refund, you risk delays or even having the payment held until those details are confirmed.

At the end of the day, this change is about making the system faster and more secure. If you have any questions or want help, just let us know. We are here to help make this transition as seamless as possible. 

Don’t Let Bad Tax Advice Drill Into Your Finances

Dentists are no strangers to misinformation. Patients walk in with something they read on the internet about whitening hacks or miracle cavity cures, and you have to set the record straight. The same thing is happening with taxes, only the consequences can be far more expensive.

The IRS recently sounded the alarm about a wave of misleading tax tips spreading on social media. These aren’t just minor misunderstandings; they can lead to audits, rejected claims, and stiff financial penalties. As James Clifford, Director of Return Integrity and Compliance Services, explained: “People who follow this advice could end up with rejected claims and a penalty of up to $5,000 in addition to any other penalties that might apply.” So far, the agency has imposed more than 32,000 penalties, costing taxpayers more than $162 million. That’s a high price to pay for taking advice from a TikTok video.

It’s easy to see how these schemes hook people. Who wouldn’t want to believe there’s a hidden credit that could reduce your tax bill? But just like those too-good-to-be-true dental “hacks,” tax shortcuts you see online can do more harm than good.

The Lure of Fake Deductions

The most common scams promise credits that most taxpayers simply don’t qualify for. A few of the recent offenders include:

  • Fuel Tax Credit: This is real but reserved for very narrow uses like farming equipment or off-highway machinery. Most dentists driving to and from the office don’t qualify.
  • Pandemic-Era Leave Credits: Any claims for sick or family leave credits expired well before 2025 and are no longer available to most taxpayers. 
  • Employee Retention Credit (ERC): Designed for businesses hit by pandemic-related disruptions, but it has also expired. There were so many people filing under questionable circumstances that the IRS permanently paused new claims. 
  • R&D Tax Credits: Unless you’re inventing new dental technology in your spare time, you are very unlikely to qualify for this credit. Practice improvements will not count as “research and development.”
  • Charitable Deduction Scams: You must donate to IRS-qualified organizations to claim this deduction. Inflating donations or picking unqualified groups won’t fly, even if online promoters say otherwise. If you are unsure whether a nonprofit qualifies, we can help verify it for you. 

For dental practice owners and associates alike, falling for one of these “strategies” doesn’t just delay your refund; it can also result in penalties that eat into your hard-earned income.

Why Dentists Are Particularly at Risk

Running a practice or working as an associate often means long hours and little time to dig into the fine print of tax law. It’s tempting to lean on what you see shared by colleagues or on social platforms. But what worked (or appeared to work) for someone else could land you in serious trouble. Just as every patient case is different, every tax situation is unique.

Another danger? Unscrupulous tax preparers. Some promise outsized refunds, but don’t sign the return themselves. This is a huge red flag that you might be working with a “ghost preparer.” If the IRS comes calling, you’ll be left holding the bag. Others may use your information for identity theft.

The Case for Professional Guidance

The reality is simple: tax law is complex, and dentists face unique challenges when balancing personal and practice-related finances. From equipment depreciation to managing associate pay, your situation is nothing like the “average” taxpayer’s. That’s why advice pulled from Facebook or a message board is more likely to cause problems than provide solutions.

When you work with a qualified CPA who knows dentistry, you get:

  • Tailored advice that factors in your practice’s structure, your long-term goals, and your family’s financial picture.
  • Protection from penalties that could far exceed any short-term gain from a dubious deduction.
  • Accountability and peace of mind because your return is signed, accurate, and backed by someone who will stand by you if questions arise.

Stay Smart, Stay Safe

Just like patient care, your finances deserve expertise, not quick fixes. The internet may be full of “hidden” tax tips, but the only truly reliable path is working with a professional who understands both the IRS and the business of dentistry.

Don’t let misinformation eat away at your bottom line. If you’re unsure about a credit, deduction, or strategy you’ve heard about online, check with us before making a move. We are happy to help!

How IRS Staffing Cuts & System Strain Impact Taxpayers

Most dentists don’t spend much time thinking about how the IRS runs until something goes wrong. But when staffing levels are cut and outdated technology struggles to keep up, the ripple effects land directly on taxpayers and their advisors.

We saw this vividly during the COVID-19 years: mailrooms backed up, phone lines overwhelmed, and millions of paper-filed documents literally shredded. Unfortunately, even today, the IRS is still working with decades-old computer systems and a shrinking workforce. That combination makes routine tax administration harder than it should be, and it shows.

Longer Waits and Slower Processing

For dental practice owners expecting refunds, requesting transcripts for a business loan, or trying to resolve a tax notice, patience will be required. Reduced staffing means:

  • Refund delays can stretch for weeks or months beyond normal timelines.
  • Loan application slowdowns when lenders can’t get timely IRS transcripts to verify income.
  • Tax notices drag on, with responses and resolutions sometimes taking months or years.

Fewer Ways to Reach Real Help

Calling the IRS has never been easy, but reduced staff only makes it worse. Hold times of 30–60 minutes used to be considered long; now, taxpayers often face dropped calls or phone lines that simply aren’t staffed.

On the paper side, even though electronic filing has expanded, the IRS still requires many documents to be mailed. When those pile up, processing lags, and sometimes correspondence goes missing altogether. That leaves taxpayers in limbo, waiting for updates that may never come without repeated follow-ups.

The Cost to Small Business Owners

For busy dental professionals, the biggest hidden cost of IRS delays is time. When an issue drags on, accountants and advisors have to chase down answers, resend documents, and make repeated attempts to get clarity. That extra effort translates into higher costs for taxpayers, especially when something simple gets stuck in the system.

Why This Matters for Dental Practices

Dental practices often need timely IRS documentation to move forward with loans, refinancing, or business expansions. Delays can disrupt cash flow planning and add stress to already complex business decisions. And when the IRS is slow to process credits, refunds, or responses to tax notices, it ties up both money and attention you’d rather devote to your patients.

Looking Ahead

Ideally, government leaders would reduce tax complexity and restore IRS staffing and systems so that taxpayer services remain effective. However, under current plans, the IRS is facing deep operating and enforcement cuts, with no clear indication that Congress will reverse course anytime soon. It remains crucial for taxpayers, especially small business owners, to prepare for extended response times and reduced service levels:

  • File electronically whenever possible.
  • Keep thorough records in case correspondence is misplaced.
  • Build in extra time for loans or financial transactions that require IRS transcripts.

As your advisors, we’ll keep monitoring IRS developments and advocate for solutions that make the system work better. In the meantime, know that we’re here to help you navigate delays and reduce stress wherever possible.

What the Latest Federal Tax Bill Means for Dental Practices and Their Owners

After months of debate, Congress has passed an enormous budget reconciliation bill with a wide range of tax changes affecting small businesses and individual taxpayers alike. While the headlines focus on sweeping economic measures, many of the provisions could directly shape how dental practices operate, invest, and plan ahead.

If you own or manage a dental practice, here are the highlights you should know and steps you might consider in response.

New Incentives for Equipment and Technology Investments

One of the most significant changes is the return of full expensing for major purchases. If you’re planning to upgrade your equipment, invest in advanced imaging technology, or modernize your administrative systems, the revised Section 179 rules will allow you to deduct up to $2.5 million of qualifying purchases in the year you buy them.

Previously, deductions had to be spread out over time, but the accelerated write-off can now provide immediate tax relief and help improve cash flow. Keep in mind that if your total qualifying purchases exceed $4 million, the deduction begins to phase out.

More Room to Deduct Interest Expenses

If you’ve taken out loans to renovate your office, open a second location, or acquire another practice, the rules for deducting interest payments just became more favorable. The new law allows interest deductions to be calculated using EBITDA, earnings before interest, taxes, depreciation, and amortization, rather than the narrower EBIT measure.

This adjustment increases the amount you can deduct each year, which can be especially helpful for practices carrying debt from growth or equipment financing.

Expanded Research and Development (R&D) Deductions

While many dental practices don’t think of themselves as research businesses, certain investments – like developing proprietary patient education materials, implementing new digital workflows, or testing innovative service models – can qualify for R&D deductions. Under the bill, smaller businesses with less than $31 million in gross receipts (which is most dental practices) can immediately deduct eligible R&D costs rather than amortizing them over time. This change rewards innovation and may help offset the expense of improving patient care.

QSBS Exclusion Returns for C-Corporations

If your practice is organized as a C-corporation and you’re considering selling your business in the next few years, take note of the revived Qualified Small Business Stock (QSBS) exclusions. Owners who meet certain requirements, including holding their shares for at least five years, may be able to exclude up to 100% of gains from federal tax when they sell. This could translate into substantial tax savings at the time of exit or succession planning.

SALT Deduction Cap Temporarily Increased

The bill raises the cap on state and local tax (SALT) deductions to $40,000, with a gradual phaseout beginning at $500,000 of income. However, this relief is temporary; the cap is scheduled to revert to $10,000 in 2030. For dental practice owners, especially those operating pass-through entities, this creates a narrow planning window. It’s a good time to reevaluate whether the entity-level SALT workaround remains effective and how to best optimize deductions while the higher cap is in place. Strategic tax planning now can help minimize liabilities before the cap drops again.

Personal Tax Changes That Matter to Practice Owners

While these business provisions can influence practice finances, there are also personal tax updates to be aware of:

  • Expanded Child Tax Credit: Temporarily increased to up to $2,500 per qualifying child, with more flexibility in how it phases in.
  • New Deductions for Common Expenses:
    • Up to $6,000 in additional standard deduction for taxpayers over 65.
    • Interest deductions on loans for U.S.-assembled electric vehicles, up to $10,000.
    • Above-the-line deductions for overtime and tip income (though not likely as relevant for dental offices).
  • No Federal Tax on Tips: While this mostly affects hospitality workers, employees with tip income will no longer pay federal tax on it.
  • Individual Tax Rates Extended: The lower tax brackets set in 2017 are extended through 2028, helping many owners save on personal income tax.

How Your Practice Can Prepare

Navigating these changes doesn’t have to be overwhelming. Here are a few things you should consider:

  • Evaluate planned purchases of equipment and technology to optimize deductions.
  • Review financing structures to maximize interest expense benefits.
  • Assess your entity type and QSBS eligibility if a sale or transition is on the horizon.
  • Update your personal tax plan to leverage available deductions and credits.

Even though this legislation is complex, and this just scratches the surface of what it contains, it creates some opportunities to strengthen your practice’s financial position while supporting your personal goals. If you’d like to discuss how these updates apply to your specific situation, we’re here to help.

What Dental Practice Owners Should Know About the Latest Tax Bill

A new tax bill making its way through the House Ways and Means Committee could significantly impact dental practice owners.  While nothing is finalized yet, understanding what’s in the bill and what could change is the first step toward preparing for potential impacts in 2026 and beyond.

Here are some of the proposed highlights most relevant to dental practice owners:

  1. Enhanced Pass-Through Deduction: The bill would increase the Qualified Business Income (QBI) deduction from 20% to 23% and make it permanent. This would reduce taxable income for dental practices structured as S corporations, partnerships, or sole proprietorships.
  2. Increased Standard Deduction and Child Tax Credit: The standard deduction would be temporarily increased by $1,000 for single filers and $2,000 for married couples. In addition, the Child Tax Credit would rise to $2,500 per child, offering additional relief for dental professionals with families.
  3. Adjusted SALT Deduction Cap: The state and local tax (SALT) deduction cap would increase from $10,000 to $30,000, phasing out gradually for incomes above $400,000. For homeowners, especially those whose property taxes exceed $10,000, this change could allow for significantly greater deductibility.
  4. Elimination of Taxes on Tips and Overtime Pay: The bill would exempt tip income and overtime pay from federal income taxes in certain industries. While not directly applicable to most dental practice owners, it could influence compensation structures for support staff.
  5. Extended Bonus Depreciation and Interest Deductions: The bill extends 100% bonus depreciation and allows amortization and depreciation to be included in interest deduction calculations through 2029, making capital investment in technology or equipment more financially viable.
  6. Changes to Personal Deductions: The proposal would make permanent several itemized deduction limitations (such as on mortgage interest and casualty losses), eliminate personal exemptions, and simplify deduction structures.
  7. Rollback of Clean Energy Incentives: Provisions from the Inflation Reduction Act would be scaled back or phased out. Dental practices considering green upgrades, like solar panels or energy-efficient systems, may need to reassess their cost-benefit analysis under a new tax environment.
  8. End of IRS Direct File Program: The legislation would terminate the current IRS Direct File system and replace it with a public-private partnership, returning most free filing options to private software providers.

Preparing Your Dental Practice

The proposed tax bill is still in its early stages, and no immediate action is required. However, staying informed now can help you respond effectively if the legislation advances in its current form. If the bill passes as written, dental practice owners may need to:

  • Reassess business structure: Changes to the Qualified Business Income (QBI) deduction could make it worthwhile to review whether your current entity type, such as an S corp or sole proprietorship, is still the best fit.
  • Revisit compensation strategies: While the elimination of taxes on tips and overtime pay may not directly apply to dental practices, it could influence how you approach payroll, especially for administrative and support staff.
  • Consider the timing of future investments, especially for equipment or sustainable upgrades that may lose tax advantages.
  • Reach out to us with questions: Once legislation is finalized, we can help you understand the full impact on both your business and personal finances and identify opportunities to optimize your tax strategy.

What’s Next?

The bill still needs to pass the full House and then move through the Senate, where key provisions could be revised or removed. In short, the final version could look significantly different. That said, with the 2017 tax cuts set to expire after 2025, action on tax legislation is expected before year-end.

For now, the best course of action is to stay informed and prepare to plan ahead should the bill advance. As with any proposed legislation, details remain in flux, and this particular bill seems to be evolving almost weekly. We will do our best to keep you informed as updates are made public and the bill continues its journey through Congress and, potentially, to the President’s desk for final approval later this year.

If it moves forward, we’ll be here to help you understand the specifics and make proactive decisions for your dental practice.

What Dental Practice Owners Need to Know About New Federal Payment Changes

Big changes are coming to how the federal government issues payments, and dental practice owners need to be prepared. The White House has announced it will eliminate paper checks for nearly all government payments by September 30, 2025, so the U.S. Treasury has approximately six months to make the necessary adjustments. If you or your practice currently receive any federal payments by check, including tax refunds, Medicare reimbursements, or other government-related funds, it’s time to get ready for a full transition to electronic payments.

Why the Change?

The move to eliminate paper checks is part of a broader effort to improve efficiency, reduce fraud, and save taxpayer dollars. Electronic payments are faster, more secure, and more cost-effective than mailing paper checks. The Treasury estimates that moving to digital payments could save hundreds of millions of dollars annually.

How It Could Affect Dental Practice Owners

If your practice is owed a federal refund or receives any kind of government reimbursement, the payment will now be issued via direct deposit or a similar electronic method. That means:

  • No more waiting on the mail. Payments will arrive more quickly.
  • Reduced risk of lost or stolen checks. Electronic transfers are generally safer.
  • Streamlined bookkeeping. Digital payments are easier to track and reconcile.

For dental practices that rely on timely cash flow to cover payroll, supplies, or operating costs, faster access to funds can make a significant difference.

What You Should Do Now

If you haven’t already made the switch, now’s the time to update your payment preferences:

  • Set up direct deposit for IRS payments. Make sure your practice provides its correct banking information each time you file a return so you can receive any IRS refunds electronically. 
  • Check Medicare provider information. If you participate in Medicare, confirm your electronic payment enrollment is up to date.
  • Talk to your vendors. Many private insurers and suppliers are also pushing for digital payments. Updating your systems now will set you up for a smoother future.
  • Review your accounting systems. Ensure your bookkeeping processes are ready to handle incoming electronic payments efficiently.

What Happens If You Do Nothing?

If you don’t update your information, you could experience delays in receiving payments. In some cases, the government may issue payments via a prepaid debit card if no direct deposit information is available, which could add cost and complications to your accounting and cash management processes. Additionally, prepaid debit cards pose increased risk due to loss, misuse, or internal theft.

How We Can Help

At Edwards & Associates, we specialize in helping dental practice owners navigate financial changes like this one. If you need assistance updating your information with the IRS or Medicare, reconciling digital payments, or ensuring your cash flow remains strong during the transition, we’re here to help.

BOI Filing for Dental Practice Owners: Our Attempt to Make Messy Timeline More Clear

If you’ve been trying to keep up with the Beneficial Ownership Information (BOI) reporting requirement, you’re not alone in feeling like it’s turned into a legal ping-pong match. Created to crack down on financial crimes, this new rule has become confusing, controversial, and as of now, unenforceable.

Here’s what dental practice owners need to know and what to do (or not do) next.

BOI Requirements: The Timeline That Just Won’t Quit

The Corporate Transparency Act (CTA) was passed in 2021, and it included new reporting requirements for small businesses, including most dental practices. But since then? It’s been chaos. Here’s a blow-by-blow:

  • January 1, 2024 – BOI reporting officially takes effect. New companies must file within 90 days of formation, and existing companies had to file by January 1, 2025.
  • December 3, 2024 – A Texas court issues a preliminary injunction, halting BOI enforcement nationwide and raising constitutional concerns.
  • December 5, 2024 – The federal government appeals the injunction, attempting to reinstate the rule.
  • December 23, 2024 – The Fifth Circuit Court briefly lifts the injunction, reinstating the January 1 deadline. FinCEN (the Treasury’s enforcement arm) responds by extending the filing deadline to January 13, 2025.
  • December 26, 2024 – The appeals court changes its mind again and reimposes the injunction, stopping enforcement once more. Oral arguments are scheduled for March 25, 2025.
  • January 4, 2025 – The Department of Justice files an emergency motion with the U.S. Supreme Court, asking it to lift the injunction and allow enforcement to resume. We now await the Court’s decision.
  • March 1, 2025 – A separate federal court rules the Corporate Transparency Act unconstitutional in National Small Business United v. Yellen. FinCEN announces it will not enforce BOI reporting against the plaintiffs in that case but keeps requirements in place for everyone else.
  • March 25, 2025 – IRS issues a memorandum clarifying that, due to legal uncertainty, BOI enforcement is paused pending further resolution. 

So, What Does This Mean for Dental Practice Owners?

The short version: You don’t have to file right now.

If you’ve already filed? No harm done, just sit tight.

If you haven’t? That’s fine too. The rule still exists on paper, but it’s tangled in legal challenges and is not being enforced at the moment.

But Will I Have to File Later?

Possibly. The Supreme Court could lift the injunction, or Congress could revise the law. But for now:

  • There are no penalties for not filing.
  • FinCEN cannot enforce the rule due to the ongoing legal battles.
  • Filing is on pause, not eliminated.

What Should You Do Right Now?

  • Don’t panic. No action is required at the moment.
  • Stay informed. This could change with little notice, and we will do our best to keep you informed.
  • Keep records ready. If enforcement resumes, filings may need to happen quickly.

Final Thought

We wish this were clearer, but welcome to regulatory whiplash. BOI reporting is either something you don’t have to do – or something you’ll need to do soon, once the courts make up their minds.

We’re watching this closely, and as soon as there’s a final answer, you’ll be the first to know.

Have questions about your practice structure or potential filing obligations? Reach out. We’re here to help you stay out of trouble and focused on your patients, not paperwork.

Podcast Recap: Tax Season Survival Guide – Expert Tips from a Tax Manager

Tax season can be overwhelming for dental professionals juggling practice management, patient care, and financial planning. But with the right strategies in place, you can avoid common pitfalls, reduce stress, and keep more of what you earn. In this episode of Beyond Bitewings, Edwards & Associates’ Tax Manager, Lorraine Kent, shares her best tax season survival tips, covering everything from deductions to tax planning strategies.

What’s Deductible (and What’s Not)?

One of the most frequently asked questions during tax season is, “What can I deduct?” While deductions can reduce taxable income, not everything qualifies.

For example, if you own rental property, expenses become deductible once the property is listed for rent – not before. Mortgage interest, property taxes, insurance, and routine maintenance are deductible, but major improvements must be capitalized and depreciated over time.

For dentists, business deductions include necessary expenses like equipment purchases, supplies, and professional development costs. However, personal expenses, like that daily coffee run, aren’t deductible just because you own a business. If you’re unsure, consult with your CPA before claiming a deduction.

Depreciation and Tax Planning for Asset Sales

Many dental professionals invest in real estate as a wealth-building strategy. However, Lorraine warns that depreciation can create tax liabilities when you sell an asset. Depreciation recapture means you could owe ordinary income tax on the portion of the gain attributed to depreciation deductions.

To minimize this impact, tax planning is essential. Strategies like timing asset sales, offsetting gains with losses, or utilizing a 1031 exchange can help reduce your tax burden. Before selling a rental property or dental equipment, talk to your accountant to ensure you understand the tax implications.

Avoiding Common Tax Filing Mistakes

The IRS uses electronic matching to compare reported income against W-2s, 1099s, and other tax documents. If something doesn’t match, expect a notice. One of the biggest mistakes taxpayers make is forgetting to report investment income.

For example, if you had a brokerage account that was closed mid-year, you still need to report income or gains from that account. Missing even one 1099 can lead to unnecessary penalties and interest.

Lorraine’s advice? Keep track of all tax documents, check for missing forms before filing, and review prior-year returns to ensure nothing is overlooked.

Tax Strategies for Smarter Planning

Tax planning isn’t just about what happened last year; it’s about looking ahead. Loss harvesting is one strategy that can help reduce taxable gains. If you have stocks with unrealized losses, selling them strategically can offset taxable gains from other investments, including real estate sales.

However, be mindful of the wash sale rule, which disallows a deduction if you repurchase the same stock within 30 days. Proper tax planning allows you to maximize benefits while staying compliant.

Red Flags That Can Trigger IRS Scrutiny

Certain deductions attract more attention than others. Lorraine highlights three areas where taxpayers often make mistakes:

  • Meals & Entertainment: Business meals must involve a client or work-related discussion to qualify. That solo coffee run? Not deductible.
  • Travel: Deducting a vacation as a ‘business trip’ without clear business purposes can raise red flags.
  • Auto Expenses: Claiming 100% business use of a personal vehicle is rarely justifiable unless you have multiple business locations.

Proper documentation is key. Keep detailed records and receipts to support deductions if audited.

Texas Business Property Tax: What Dentists Need to Know

For Texas dentists, business property tax (BPP) is an additional annual tax assessed by the county. This tax applies to tangible assets like dental equipment and furniture. If you’re a new practice owner, expect to pay BPP based on the initial purchase price of your equipment. However, over time, you may be able to adjust valuations to reflect depreciation.

If you receive a BPP notice, don’t ignore it. Review it with your CPA to ensure accuracy and identify opportunities to lower your assessment.

Final Thoughts: Communication Is Key

The biggest tax mistakes often stem from a lack of communication. Major financial decisions like buying new equipment, selling property, setting up a trust, can all have tax implications. Yet, CPAs aren’t mind readers.

Before making big moves, check with your accountant. A quick conversation can help you avoid unnecessary tax bills and set you up for long-term financial success.

Want more expert insights? Subscribe to Beyond Bitewings and stay ahead of the game this tax season! For personalized tax guidance, contact the Edwards & Associates team today.

​Busting Common Tax Myths for Dentists

Taxes can be confusing, especially when so much misinformation is floating around online. Whether you’re scrolling through social media, chatting with colleagues, or just assuming something sounds right, it’s easy to fall for common tax myths – some of which could leave you with a hefty bill from the IRS.

As a dental professional, understanding tax laws is crucial to protecting your practice’s bottom line. From home office deductions to retirement withdrawals, we’re breaking down some of the biggest tax myths that could trip you up. Here, we separate fact from fiction and make sure you’re not caught off guard.

Myth #1: Retirement money is tax-free.

Many people assume that once they retire, their money is theirs to spend tax-free. Unfortunately, that’s not the case – most withdrawals from traditional 401(k)s and IRAs are taxed as ordinary income. If you take out too much in a single year, you could even push yourself into a higher tax bracket. The only exception? Roth IRAs and Roth 401(k)s,which allow for tax-free withdrawals after age 59½, as long as the account has been open for at least five years.

Myth #2: Reporting dental supplies and lab fees under Cost of Goods Sold (COGS) reduces audit risk.

It’s a common misconception that classifying dental supplies and lab fees as COGS can lower the chances of an audit by reducing gross profit. However, misclassifying expenses can raise red flags with the IRS and lead to potential issues. ​ 

Myth #3: Large equipment purchases should be deferred until the fourth quarter for maximum tax benefits.

Many dental professionals believe that postponing significant equipment investments until year end maximizes tax deductions. In reality, the timing of such purchases should align with the practice’s operational needs rather than solely focusing on tax implications. 

Myth #4: Home office deductions are a red flag for audits.

There’s a lingering belief that claiming a home office deduction increases the likelihood of an audit. While this was a concern in the past, legitimate home office deductions, when properly documented, are acceptable and do not inherently trigger audits. However, keep in mind that you can only claim a home office deduction if you own a business. If you are an employee, this deduction is no longer available. 

Myth #5: Personal dental expenses are fully deductible.

Some assume that all personal dental expenses can be deducted from their taxes. However, only unreimbursed medical and dental expenses exceeding a certain percentage of adjusted gross income (AGI) are deductible. It’s crucial to understand these thresholds to avoid disallowed deductions. ​ 

Myth #6: Income from side gigs or online sales isn’t taxable.

Some people mistakenly believe that earnings from side jobs, freelance work, or online sales are tax-free. In reality, all income, regardless of the source, must be reported and is subject to taxation. Overlooking this can lead to underreporting and potential penalties. ​

Myth #7: Selling a dental practice is tax-free if reinvested.

Some dentists believe that proceeds from selling their practice are tax-free if reinvested into another venture. However, such sales are typically subject to capital gains tax, and proper planning is essential to manage the tax implications effectively. 

Myth #8: Casual labor payments don’t require tax reporting.

There’s a misconception that payments to temporary or casual workers don’t need to be reported. However, businesses are required to report payments to all workers on a Form 1099 if they total more than $600. ​

Myth #9: Government benefits like social security and unemployment are tax-free.

Many believe that Social Security and unemployment benefits come tax-free, but that’s not entirely true. Unemployment benefits are taxed at your normal income tax rate at the federal level and in most states, meaning you could owe taxes when filing if you don’t have them withheld upfront. Social Security benefits are taxed based on your total income – if you earn above a certain threshold from other sources (like retirement savings or part-time work), up to 85% of your benefits could be subject to income tax.

Tax laws are intricate and continually evolving. We can help ensure compliance and optimize you tax position, so reach out to us today for help. Relying on myths or outdated information can lead to unintended tax liabilities.​

Protecting Your Dental Practice from 2025 Tax Scams

In 2025, IRS-related scams are becoming increasingly sophisticated, requiring vigilance and proactive measures to safeguard your practice and personal finances. Even the savviest of professionals can fall prey to tax scams, so here is the latest information about how these scams work so you (and your family and friends) can avoid becoming a victim.

Key Tax Scams Targeting Professionals in 2025

  1. Phishing Emails and Texts: Scammers impersonate the IRS via email or text, urging you to click malicious links or provide sensitive information.
    • The IRS never initiates contact this way. Exercise extreme caution with unsolicited digital communications.
  2. Phone Scams: Fraudulent callers posing as IRS agents threaten legal action or demand immediate payment, often via unconventional methods like gift cards or wire transfers.
    • The IRS will never demand immediate payment over the phone or resort to threats.
  3. Fake Tax Preparers (“Ghost Preparers”): Unqualified individuals offer tax preparation services but refuse to sign the return. This leaves you liable for any errors or fraud.
    • Always verify your preparer’s credentials and ensure they will sign your return.
  4. Identity Theft: Criminals use stolen personal information to file fraudulent tax returns and claim refunds in your name.
    • Filing early is a proactive defense.
  5. Social Media Scams: Misinformation about tax credits or refunds spreads rapidly on social media, enticing individuals to share personal data.
    • Always verify information through official IRS sources or a trusted professional, like us.

Who Is At Risk?

While anyone can be targeted by tax scams, certain groups are particularly vulnerable:

  • Elderly Taxpayers: Seniors are often targeted because they may be less familiar with digital threats and more likely to trust official-sounding communications.
  • New Taxpayers: Young adults or those filing taxes for the first time may be unaware of IRS procedures and more susceptible to scams that appear legitimate.
  • Small Business Owners: Juggling multiple financial responsibilities may make them more likely to fall for scams, especially those targeting payroll or W-2 information.
  • Non-English Speakers: Individuals with limited English proficiency may be more vulnerable to scams due to language barriers.
  • High-Income Earners: They may be targeted with aggressive tax shelter schemes or promises of unrealistic refunds.
  • Taxpayers Expecting Refunds or Credits: Those anticipating Economic Impact Payments or Recovery Rebate Credits may be more susceptible to scams promising these benefits.
  • Social Media Users: Active social media users may encounter scams spreading misinformation about tax credits or refunds.
  • Victims of Data Breaches: Individuals whose personal information has been compromised in data breaches are at higher risk of identity theft and fraudulent tax return filings.

Essential Protective Measures

It is often those that think they can’t be fooled by a scam like this that fall for them, so don’t think you are immune.

  • Verify All Communications: The IRS primarily initiates contact via mail. Be highly suspicious of unsolicited emails, texts, or calls.
  • Choose a Reputable Tax Professional: Work with a reputable CPA firm (like Edwards & Associates, of course) with specific expertise in serving dental practices.
  • Protect Personal Information: Shred sensitive documents, use strong passwords, and monitor your financial accounts regularly.
  • Report Suspicious Activity: Report any scam calls or phishing emails to the IRS immediately by emailing phishing@irs.gov.

Key Tax Considerations for Dental Practices

While safeguarding against scams is important, remember to optimize your legitimate tax planning too. We can help you:

  • Identify Practice-Specific Deductions: Understand deductions unique to dental practices, such as those related to equipment, continuing education, and professional liability insurance.
  • Plan for Retirement: Implement robust retirement planning strategies to minimize your long-term tax burden.
  • Choose the Best Business Structure: Ensure your practice is structured in the most tax-advantageous way.

Staying informed and proactive is essential to protect your financial interests. We are dedicated to providing expert tax and accounting services tailored specifically to the needs of dental professionals, so contact us today to discuss how we can help you safeguard your practice and optimize your financial strategies.

2025 IRS Rules for Vehicle Depreciation

If your dental practice uses business vehicles, a recent IRS update could affect your tax deductions. For the first time in three years, the IRS has lowered depreciation limits for 2025. These changes, tied to inflation and market trends, impact how dental professionals claim vehicle-related expenses. Here’s a simple breakdown.

Lower Depreciation Limits for Business Vehicles

Each year, the IRS adjusts vehicle depreciation limits. For vehicles placed into service in 2025, the new limits are:

  • With First-Year Bonus Depreciation:
    • Year 1: $20,200 ($200 lower than 2024)
    • Year 2: $19,600 ($200 lower than 2024)
    • Year 3: $11,800 ($100 lower than 2024)
    • Each following year: $7,060 ($100 lower than 2024)
  • Without First-Year Bonus Depreciation:
    • Year 1: $12,200 ($200 lower than 2024)
    • Later years: Same as above

For dental professionals deducting vehicle expenses, this marks a shift after several years of increases.

What About Leased Vehicles?

If you lease a vehicle for your practice, the IRS requires an income inclusion adjustment to ensure fair tax treatment between leased and owned vehicles. The amount varies based on the vehicle’s market value and lease duration. If you’re leasing, talk to your accountant to see how this affects your tax planning.

Why Did the Limits Change?

The IRS adjusts depreciation limits based on market trends. Recent Bureau of Labor Statistics data shows:

  • Used car prices increased by 1% in the past year.
  • New car prices dropped by 0.3% in the same period.

These shifts influenced the IRS’s decision to reduce depreciation limits.

How Does This Affect Your Dental Practice?

  • Tax Planning – Thinking of buying or leasing a vehicle? These updates may impact your tax benefits. Check with your accountant for the best approach.
  • Compliance – If you lease, be sure you’re calculating required income inclusions to stay IRS-compliant.
  • Budgeting – Since depreciation affects cash flow and tax deductions, plan accordingly to avoid surprises.

What Should You Do Next?

If you’re considering purchasing or leasing a business vehicle in 2025, understanding these IRS updates is key to maximizing deductions and avoiding tax pitfalls. Need help? Contact us today for advice on tax strategies and vehicle deductions for your practice.