Comprehensive Tax Solutions for Orthodontists

Streamlined Tax Solutions for Every Career Stage

Our Orthodontist Stats

Average R&D Tax Credit in Ortho
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Average Cost Seg Bonus
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Average ERC Credit in Ortho
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Your Orthodontic Practice Deserves Specialized Tax Strategies

Welcome to TaxRx, where we transform complicated tax laws into simple, practical, and customized tax strategies designed exclusively for orthodontists.

Whether you are a new practitioner, mid-career clinician, or looking towards retirement, we can help optimize your financial picture.

Frequently asked questions

What should new practitioners consider?

Starting your orthodontic practice is a thrilling journey, and TaxRx is here to guide you. Our experts understand the financial intricacies of the dental industry and can help you leverage tax strategies like the R&D tax credit. Did you know you could be eligible for this credit if you’ve made advancements in orthodontic technology or even improved your treatment methods? Trust us to identify every opportunity to reduce your tax burden and increase your savings.

What tax strategies should an established clinician consider?

As your orthodontic practice flourishes, so does the complexity of your tax situation. Implementing Cost Segregation strategies can lead to significant tax savings by accelerating depreciation on certain aspects of your office. Furthermore, by utilizing the Augusta Rule, you can potentially rent out your home to your business for meetings or events, tax-free for up to 14 days per year. This strategy could offer substantial tax deductions to help you focus on what matters most – your patients.

What should I consider when selling my practice?

Selling a practice can have significant tax implications, and it’s crucial for an orthodontist, or any professional, to carefully consider their tax strategies to maximize the profit and minimize the tax liability from the sale. Here are a few tax strategies that could be beneficial:

  1. Installment Sales: This is a method that allows the seller to spread the recognition of gain over the period during which payments are received. This strategy helps to manage the tax rate by not recognizing all the gains in one year and potentially bumping the seller into a higher tax bracket.
  2. R&D Tax Credits: While this may not be immediately apparent to a practicing orthodontist, research and development (R&D) tax credits can be a significant tax-saving strategy. If the practice has been involved in any innovative or improving procedures, techniques, or equipment, there might be eligibility for these credits. This can help reduce tax liability and increase the value of the practice before sale.
  3. Deferred Sales Trusts (DST): A DST allows the seller to defer capital gains tax over a contracted period of time. The proceeds from the sale are transferred into the trust, and the seller receives installments from the trust. This can be particularly useful if the seller expects to be in a lower tax bracket in future years.
  4. Qualified Small Business Stock (QSBS) Exclusion: If the practice is organized as a C corporation and has been held for over five years, it may qualify as QSBS. Upon sale, QSBS allows an exclusion of up to 100% of the gain on sale, up to $10 million or 10 times the adjusted basis of the stock.
  5. Charitable Remainder Trusts (CRT): If the seller is charitably inclined, they might consider a CRT. This strategy involves selling the practice to the trust, then the trust sells the business. The trust doesn’t pay tax on the sale, and the seller gets an income stream from the trust, as well as a charitable deduction.
  6. 1031 Like-Kind Exchanges: While this is traditionally used for real estate, it can also be utilized for the sale of a business if there is significant real estate or other like-kind property involved. It allows for deferral of capital gains taxes by reinvesting the proceeds of the sale into a similar type of property or business.
What are some tax strategies at retirement?

Retirement can have significant tax implications, and it’s crucial for an orthodontist, or any professional, to carefully consider their tax strategies to ensure their retirement savings last as long as possible. Here are some tax strategies that could be beneficial:

  1. Strategize Withdrawals: Properly timing withdrawals from your retirement accounts can reduce your tax burden. Generally, you want to withdraw from taxable accounts first, then tax-deferred accounts (like traditional 401(k)s and IRAs), and lastly from tax-free accounts (like Roth IRAs). This allows the money in the tax-advantaged accounts to continue growing tax-free for as long as possible.
  2. Roth Conversions: Depending on your income in retirement and the tax bracket it puts you in, it may be beneficial to convert some traditional IRA money to a Roth IRA. This requires paying tax on the converted amount now, but it could potentially save you from higher taxes later, especially if tax rates rise in the future.
  3. Standard vs. Itemized Deductions: The standard deduction has been significantly increased in recent years, so it might make sense for you to take the standard deduction rather than itemizing. But if you have significant medical expenses (which are common in retirement), it might still be beneficial to itemize.
  4. Qualified Charitable Distributions (QCDs): If you are 70½ or older, QCDs can be a very effective way to donate to charity. You can donate up to $100,000 per year directly from your IRA to a qualified charity, and the donation is not counted as taxable income.
  5. Health Savings Account (HSA): If you are enrolled in a high deductible health plan (HDHP), consider maximizing contributions to your HSA. HSAs offer a triple tax advantage – contributions are tax-deductible, the money grows tax-free, and withdrawals are tax-free if used for qualified medical expenses.
  6. Asset Location: Consider which types of investments to hold in which accounts. Generally, it’s more tax-efficient to hold tax-inefficient assets, like bonds and REITs, in tax-advantaged accounts, while holding tax-efficient assets, like broad-market stock index funds, in taxable accounts.
  7. Tax Loss Harvesting: If you have investments outside of your tax-advantaged retirement accounts, you can use investment losses to offset your investment gains and reduce your taxable income.
  8. Consider State Taxes: State taxes can significantly impact your retirement tax bill. If you have flexibility in where you live, it may be worth considering a move to a more tax-friendly state.

Streamlined Tax Solutions for Every Career Stage

New Practitioners

Starting your orthodontic practice is a thrilling journey, and TaxRx is here to guide you. Our experts understand the financial intricacies of the dental industry and can help you leverage tax strategies like the R&D tax credit. Did you know you could be eligible for this credit if you’ve made advancements in orthodontic technology or even improved your treatment methods? Trust us to identify every opportunity to reduce your tax burden and increase your savings.

Mid-Career Clinicians

As your orthodontic practice flourishes, so does the complexity of your tax situation. Implementing Cost Segregation strategies can lead to significant tax savings by accelerating depreciation on certain aspects of your office. Furthermore, by utilizing the Augusta Rule, you can potentially rent out your home to your business for meetings or events, tax-free for up to 14 days per year. This strategy could offer substantial tax deductions to help you focus on what matters most – your patients.

Retirement and Practice Sale

As you look towards retirement and possibly selling your practice, TaxRx can help ease the transition with tax-effective strategies. The IRS allows for tax deductions when you employ your children, which could help transfer wealth in a tax-efficient manner. Additionally, a Deferred Sales Trust could help you defer capital gains tax upon the sale of your practice, providing you a flexible retirement plan with potential tax benefits.