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Important Update: At roughly 6:30 pm EST on December 3rd, 2024 a ruling out of the U.S. District Court for the Eastern District of Texas has blocked the Corporate Transparency Act (CTA) nationwide.

We recommend businesses proceed with caution and speak with their attorneys. The current ruling means that businesses are not obligated to comply with reporting requirements at this time, but it is not a final decision. It will go through the 5th circuit court next and then to the Supreme Court. 

https://news.bloombergtax.com/daily-tax-report/corporate-transparency-act-blocked-nationwide-by-texas-court

“The Court’s order is not a final decision, so businesses should remain cautious and be prepared to comply with the CTA reporting requirements if they are revived as the case proceeds, or if the injunction is lifted.”

https://natlawreview.com/article/nationwide-injunction-blocks-enforcement-corporate-transparency-act

Written by Kevin J. Bray, Partner @ the Dental Accounting Group

As a dental practice owner, staying compliant with the ever-evolving regulations is essential to maintaining your business’s integrity and avoiding unnecessary penalties. A critical new requirement for businesses, including dental practices, is the Beneficial Ownership Information (BOI) filing mandate. This regulation is aimed at enhancing transparency in business operations and ensuring compliance with legal standards. In theory the new law has good intentions, but in practice it’s creating confusion and another layer of compliance headache for small business owners. Here’s everything you need to know about BOI filings and how to stay ahead of the curve.

What Is BOI Reporting?

The BOI filing requirement mandates businesses to disclose information about individuals who own or control a significant portion of the company. This initiative is part of broader efforts to prevent financial crimes such as fraud and money laundering by ensuring that ownership structures are transparent. Business Ownership Information (BOI) reports with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This new filing is a result of The Corporate Transparency Act (CTA) that went into effect on January 1, 2024, requiring businesses to now file ownership information with FinCEN to help identify criminal activity.

Key Facts You Should Know

Here are the main highlights of the BOI filing requirements:

  • Who Needs to File: If you registered your business with the Secretary of State in your state, you are required to file. All limited liability companies (LLCs) and corporations must file. Disregarded entities, for U.S. tax purposes, must also file. For example, if you own multiple LLCs, each requires a separate BOI report. This includes all dental practices and other businesses as well as Single Member LLCs holding real estate.
  • How to File: You will need to file directly with FinCEN on their website https://boiefiling.fincen.gov/or engage legal counsel to file on your behalf.
  • Filing Deadline: If your business existed as of January 1, 2024, you must file your BOI report by January 1, 2025.
  • Penalties for Non-Compliance: Failure to file on time can result in significant penalties, including fines of $591 per day, a potential $10,000 criminal penalty, and up to two years in prison.

Next Steps for Dental Practice Owners

If you haven’t yet filed your BOI report, now is the time to act. Here’s what you should do:

  • Contact Your Attorney: Reach out to your attorney to understand the specific filing requirements for your practice. They can guide you through the process and ensure compliance.
  • Gather Required Documentation: Collect all necessary details about the beneficial owners of your business. This includes full names, ownership percentages, and any supporting documents.
    1. Company legal name and current address
    2. Any assumed business name (DBA) used by the company
    3. EIN of the entity (Federal tax ID)
    4. Ownership information – Each owner’s name, birthdate, residential street address, and social security number
    5. A high-resolution PDF copy of your driver’s license or passport
  • Submit Your Filing: Work with your attorney to file the report accurately and on time. There are multiple providers in the space offering to assist with this, but we recommend proceeding with caution due to the sensitive nature of the information. DO NOT SHARE YOUR SENSITIVE PERSONAL & FINANCIAL INFORMATION WITH UNKNOWN SERVICE PROVIDERS. 

Key Deadlines: 

  • Existing businesses formed before January 1, 2024 – file by January 1, 2025
  • New businesses formed on or after January 1, 2024 – file within 90 days of business formation
  • New businesses formed on or after January 1, 2025 – file within 30 days of formation

The Bottom Line

Compliance with the BOI filing is a small task, but has huge penalties. We recommend all business owners (and real estate LLC’s) take prompt action. Don’t hesitate to contact your attorney to ensure your BOI filings are handled correctly and to avoid any penalties.

Stay informed, stay compliant, and focus on what you do best—caring for your patients!

Disclaimer: DG Accounting Professionals LLC dba Dental Accounting Group is not filing BOI for clients. This is a legal matter and we are not licensed to practice law. Work with your attorney to file the report accurately and on time. 

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STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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Written by Kevin J. Bray, Partner @ the Dental Accounting Group

Navigating the financial landscape of a dental practice is a bit like perfecting a smile makeover – it requires precision, expertise, and a keen eye for detail. As dental CPAs specializing in accounting and business advisory for more than 400 dental practices in the Pacific Northwest, we’ve seen firsthand how crucial it is to keep a finger on the pulse of your practice’s financials. Much like advising patients on the importance of regular dental check-ups, we recommend that owners review their financials monthly as a preventative measure against fiscal decay and a strategy for cultivating a thriving practice.

What is Financial Benchmarking?

Financial benchmarking, in the context of a dental practice, involves the analysis and comparison of your practice’s financial performance against that of similar practices within your geographical area. Using local data vs national averages is important when creating budgets and production goals. For example, insurance reimbursements and staffing costs for a practice in Washington are going to vary significantly from a practice in Iowa. By comparing your financial health to that of like-kind practices, you will gain valuable insights into local market dynamics, competitive positioning, and potential areas for improvement or growth. This laser-focused approach enables you to make informed decisions, set realistic goals, and implement best practices, ultimately scaling your practice to new heights of success.

Key Overhead Benchmarks at a Glance:

  • Staff Expenses: 36.48%
  • Dental Supplies: 6.89%
  • Lab Fees: 5.01%
  • Facility Expenses: 6.85%
  • Marketing Expenses: 1.13%
  • Merchant Service Fees: 3.32%

Note: These benchmark figures are based on 2023 financial survey data for general practices between $800k to $1m in annual revenue. This is only a snapshot from our extensive Practice Analysis Report.

Additional Key Performance Indicators That Every Practice Should Track:

  • New Patient In-flow
  • Average Daily Production
  • Hourly Chairside Production
  • Gross Production, Net Production & Net Collections
  • Accounts Receivable Aging
  • Profit Margin Before Owner & Associate Compensation

Fiscal Hygiene: Clean Up Your Practice’s Accounting Records

At the heart of effectively managing these benchmarks lies the imperative approach of keeping clean bookkeeping records and a streamlined dental specific chart of accounts. This is equivalent to maintaining a well-organized dental office where every instrument has its place, simplifying diagnosis and treatment. Clean financial records ensure that every transaction is accurately captured, enabling a clear view of the practice’s fiscal state. At the Dental Accounting Group, we use a standardized dental practice chart of accounts across all of our clients, which allows us to synchronize data into customized benchmarking reports.

Create the Habit of Reviewing Your Financials Monthly

Don’t wait until the end of the year to complete your bookkeeping. If you don’t have the time, then hire a professional bookkeeper. Think of bookkeeping and reviewing your financials as your patient’s routine cleaning: it’s essential for identifying small issues before they require major restorations. Just as regular dental cleanings and exams are essential for maintaining oral health, a disciplined approach to bookkeeping and tracking your financials with benchmarks is crucial for the vitality of your dental practice. Embrace the routine financial check-ups with the same enthusiasm you have for patient care and watch your practice not just grow, but flourish!

Need better bookkeeping and financial reporting?
Reach out to us today

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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The following alert comes from the American Dental Association.

 

On Tuesday, May 6, 2024, the FBI informed the ADA and the American Association of Oral and Maxillofacial Surgeons (AAOMS) of a credible cybersecurity threat to the practices of oral and maxillofacial surgeons. The FBI said that as of that date, there were no known cyberattack victims, but the agency is working proactively to raise awareness to help prevent victimization. The FBI suspects the group behind the cyberattacks may be shifting tactics to oral and maxillofacial surgery practices after targeting plastic surgeons last year.

While this current threat is focused on oral and maxillofacial surgeons, the FBI is concerned that the practices of general dentists and other specialists could also eventually be targeted.

Cybercriminals often use social engineering scams — such as phishing (email), SMSishing (through text or instant messaging apps) and vishing (using phone calls and voicemail) — to gain access to sensitive personal data such as electronic protected health information. Spear phishing refers to a phishing email appearing to be from a trusted contact. For example, a threat actor may use phishing to impersonate a credentialing agency. Through these scams, threat actors try to convince people to reveal sensitive information, or to click on a link, open an attachment or visit a website that causes malware to be deployed. This malware can lead to ransomware, which blocks system and/or file access  until money is paid.

The FBI provided an example in which the threat actor poses as a new patient or says they want to become a patient at the practice to obtain new patient forms online. Once the forms are received, the threat actor will then contact the practice to report they are having trouble submitting them online and ask if they can scan the forms and email them instead. The threat actor then emails the “forms” as an attachment. When the attachment is opened, malware is deployed in a phishing scheme.

The FBI requests dental practices that experience any fraudulent or suspicious activities to report them to the FBI Internet Crime Complaint Center at ic3.gov.

Precautions Practices Can Take
The Cybersecurity & Infrastructure Security Agency (CISA) recommends four vital ways to protect your practice from cyberthreats:

The following resources are also available to support healthcare professionals:

  • A CISA.gov toolkit aids healthcare practices in building cybersecurity foundations and implementing more advanced, complex tools to stay secure and ahead of current threats.
  • The U.S. Department of Health and Human Services’ Knowledge on Demand resource offers five free cybersecurity trainings that align with the top five threats named in HHS’ Health Industry Cybersecurity Practices. HHS also offers information on how the HIPAA security rule can help defend against cyberattacks.
  • The Office of the National Coordinator for Health Information Technology’s Security Risk Assessment Tool, a resource designed to help medium and small providers conduct a security risk assessment as required by the Health Insurance Portability and Accountability Act.
  • The U.S. Department of Health and Human Services Office of Information Security and Health Sector Cybersecurity Coordination Center’s “Artificial Intelligence, Cybersecurity and the Health Sector” guide shares how health care entities help protect against AI-enhanced cyberthreats.
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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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We are proud to announce the recipient of the Dental Accounting Group Business Leadership Scholarship.

dag business leadership scholarship
The Dental Accounting Group Business Leadership Scholarship (DAG Scholarship)

 

Scholarship Vision

To help bring awareness to the business side of dentistry and encourage young dentists to pursue private practice ownership. We felt it was necessary to launch this scholarship initiative to help contribute towards the success of the next generation of dental practice owners, and to help counter DSO’s growing influence in our institutions and communities.

2024 recipient elliot willis
Elliot Willis, University of Washington School of Dentistry, Class of 2024

 

About the 2024 recipient

Elliot Willis (graduating class of 2024) is this year’s recipient of the DAG Scholarship. He is a well-rounded individual that shows care and eagerness to learn and advance in the profession of dentistry. He ranks in the top 10% academically in his graduating class at the University of Washington School of Dentistry. When not studying or in clinic, he volunteers his time with local non-profits, including the Special Olympics, Everyone 4 Veterans, and the Union Gospel Mission to name a few. Prior to dental school Elliot studied business administration at Utah State University while being a student athlete. He is an outdoor enthusiast- which started at a young age growing up in foothills of the Rocky Mountains hiking, rock climbing, and camping. Elliot plans to continue his career in public health after graduation before pursuing private practice ownership. “I’m grateful to be the first recipient of the DAG Scholarship and I look forward to running my own dental practice one day after gaining more clinical experience.”

LEARN HOW TO APPLY

Benefit:

Recipient(s) will receive $3,000 & a one-hour business planning consultation with a senior client advisor.

Recipient(s):

Each year our scholarship board of advisors will select:

· One (1) dental school undergraduate student

and/or

· One (1) dental specialist graduate student

Requirements:

Must be a current 3rd or 4th year undergraduate dental student or dental specialist graduate student in the State of Washington.

Scholarship Intent:

To help bring awareness to and promote private practice ownership. We want to encourage young dentists to learn the business of dentistry and pursue private practice ownership early in their careers. The Dental Accounting Group is devoted to helping the next generation of dentists develop their business management & leadership skills to be successful practice owners.

How to apply:

Applicants must submit a cover letter, CV and business plan for their dream dental practice based on our acquisition or startup case study. Applicants must apply by November 30th. Recipient(s) will be chosen by or before March 1st.

https://dagscholarship.com/application-case-studies

After building your business plan, apply here: https://dentalaccountinggroup.typeform.com/to/IJjs4ycW

Learn More: https://dagscholarship.com/

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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Author: Kevin J. Bray, Partner @ The Dental Accounting Group


Starting in 2020, Washington Delta Dental (DDWA) introduced pivotal changes to its Provider Reimbursement Model (PRM), designed to address the economic challenges and feedback from dental care providers across the state. This collaborative approach has culminated in a revised system that’s attempting to meet the economic and clinical demands of tomorrow.

As we head into 2024, Washington Delta Dental (DDWA) will introduce another update to their Provider Reimbursement Model (PRM), promising to help the financial underpinning of dental practices. But the question on every practitioner’s mind is straightforward: are these adjustments a beacon of progress or merely a drop in the ocean of economic necessity?

DDWA PRM Overview

Credit: Delta Dental of Washington

The Promise of Progress

DDWA has pledged a significant investment in reimbursement enhancements, with an estimated $100M earmarked for provider compensation. Additionally, the model now promises to bring about “an increase to your rung score” for 60% of practices on the PRM, ensuring no decreases in fees from the previous year.

The revised PRM marks a significant departure from the status quo, responding to practitioner feedback with a series of strategic enhancements. The highlight is a 5% increase in select hygiene codes, projected to deliver an “overall average annual increase of approximately $5K for each eligible practice.” This is complemented by a shift from a 10-year to a 2-year look-back period for Continuity of Care metrics, reflecting a pragmatic approach to measuring practice performance. Furthermore, DDWA has taken a commendable step towards equity by integrating the “Ultra-Rural” market type into the PRM, aiming to level the playing field for practices across diverse geographic locales.

DDWA PRM Timeline for Inflationary Increases

Credit: Delta Dental of Washington

The Economic Realities

Despite DDWA’s proactive stance, the adequacy of the 5% increase is under intense scrutiny. With overhead costs skyrocketing and hygienist wages in metropolitan areas like Seattle nearing $75 per hour, the incremental raise falls short of what is needed to navigate the economic currents of 2024 and beyond. The hygiene department is not only central to patient care but also to the financial health of a practice. As such, practice owners are advocating for further increases in hygiene reimbursements. This would enable them to pay competitive market wages to hygienists, maintain the quality of patient care, and ensure the profitability of their hygiene department. The delicate balance between fair compensation and operational sustainability is critical. Without additional adjustments to the reimbursement model that account for the steep rise in labor costs, particularly in metropolitan areas, practice owners may find it increasingly difficult to manage profitability while upholding the highest standards of patient care. The adjustment, although a positive acknowledgment, does not fully mitigate the escalating expenses in supplies, services, utilities, and equipment that are outstripping general inflation rates. Therefore, a call to action is clear: future iterations of the PRM must consider more substantial increases in  reimbursements to ensure the vitality and success of dental practices.

2023 DAG Client Survey Staffing Cost %​

2023 dag client survey staffing cost percentage

© 2023 DG Accounting Professionals LLC.

Staffing costs continue to grow in real dollars and eat up a greater portion of the overall overhead. Many practices are watching total staff costs rise to nearly 40% of their revenue as staff wages increase and revenue remains stagnant.

2023 DAG Client Survey Profit Margin %

2023 dag client survey profit margin percentage

© 2023 DG Accounting Professionals LLC.

Profit margins before associate pay have dropped in recent years mainly due to wage inflation and other rising costs of doing business in urban metropolitan areas. Practices across the board saw roughly a -5% decline in profits YOY.  

A Tale of Two Practices

The disparity between urban and rural practices remains a critical subplot in this narrative. While the new model intends to harmonize this imbalance, rural practices continue to navigate unique challenges that a universal model might not fully address. Meanwhile, urban practices grapple with a competitive job market and elevated living costs. The “Ultra-Rural” adjustment, although well-intentioned, could still leave certain practices grappling with financial sustainability. The implications of these changes are far-reaching. Dental practices across Washington can anticipate a more equitable reimbursement scenario. By integrating “ultra-rural” market type and adjusting targets to the 95th percentile per market, DDWA aims for a fair comparison among peers, fostering a level playing field for all practices, irrespective of their size or location​​.

New Ultra Rural Market Types Added:

DDWA PRM New Ultra Rural Market Types

Credit: Delta Dental of Washington

Summary of Key Modifications Taking Effect

In the spirit of transparency and to aid providers in understanding the impending modifications, DDWA has offered a detailed glimpse into the changes:

  • Inflationary Adjustments: A 5% increase on select hygiene codes for participating providers will be instituted. This adjustment is a strategic move to counteract inflationary pressures but falls short of the needs of the average practice. The overall average annual increase is only approximately $5K for each eligible practice. This is hardly an “inflationary adjustment” considering wage inflation alone for full-time hygienists has increased on average 15% during the last two years.
  • Simplified Metrics & Feedback-Driven Revisions: The PRM will adopt simplified metrics for assessing practice performance. For instance, the retention metric has been revamped to a “Continuity of Care” standard, focusing on a 2-year look-back period, down from the previous 10-year span, to better align with practice realities.
  • Expansion of Eligibility: With the PRM modifications, a significant “68% of practices on the PRM will experience a score increase and an additional average annual projected increase of ~$9K per practice”.
  • Fee Schedule Updates: Providers will see their new fee schedules on the Provider Portal, which will automatically reflect the changes for 2024.
  • Inclusive Model Adjustments: Modifications will affect all four inputs—practice costs, prevention, access, and retention—streamlining the metrics for better clarity and ease of management.
  • Prevention-Centric Increases: There is a special focus on preventive procedures, with a 5% inflationary increase on codes such as D1110 (adult cleaning) and D1120 (child cleaning), which are essential to maintaining oral health.

A Future in Flux

Looking ahead, the true impact of the PRM changes will only be measurable in hindsight. While the modifications are a testament to DDWA’s commitment to iterative improvement and stakeholder engagement, the sustainability of dental practices hinges on the alignment of reimbursement rates with the dynamic economic landscape. As practitioners and DDWA alike navigate these changes, ongoing dialogue and flexibility will be crucial in ensuring that the PRM evolves in step with the real-world financial demands of dental care.

Conclusion: Caution Meets Optimism

In conclusion, while DDWA’s PRM updates for 2024 mark a significant step towards addressing the economic challenges faced by dental practitioners, there’s a palpable sense of caution. Is a 5% increase sufficient to keep up with wage inflation and the ever-growing overhead costs? Will these changes truly bridge the gap between rural and urban practice economics? And importantly, will the revisions enable practice owners to sustainably compensate their team and ensure profitability?

From our perspective, the increases fall short. Based on our 2023 DAG client survey, hygiene wages increased more than 15% during the last two years, which is roughly a $17k-$20k payroll increase per full-time hygienist. If an average practice is doing $1m in collections and they are only seeing a $5k bump as an inflationary adjustment, it’s clearly falling short of the economic demands of a traditional practice staff model. Time will tell if these changes herald a new era of financial prosperity or if they serve as a precursor to a more comprehensive overhaul that many practitioners believe is necessary. What is clear is that the dental community must remain vigilant, adaptive, and vocal to ensure that their economic needs are met not just in 2024, but in the years that follow.

Author’s note: This article merges two perspectives into a comprehensive narrative, weighing the optimism surrounding DDWA’s PRM changes against the skepticism of whether they go far enough in addressing the real economic pressures of dental practices. It offers a balanced view that acknowledges the effort while calling attention to the reality of the financial challenges that lie ahead. The Dental Accounting Group is a fierce advocate for dental practice owners. We will continue to analyze this reimbursement model in the years to come and voice our perspective to DDWA.

 

Questions? Refer to your new Delta Dental PRM portal to see the economic impact on your practice. They’ve also added a new glossary of terms:

Additional Reimbursement Resources:

Additional DDWA PRM Resources

Credit: Delta Dental of Washington

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3015 112th Ave NE, Suite 210

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STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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RETIREMENT PLAN LIMITS

The 2023 maximum total contributions to a defined contribution plan (401k/Profit Sharing, SEP) is $66,000 or $73,500 with an over age 50 catch-up contribution.

We encourage our clients to review their retirement plan every few years to be sure they are utilizing the most advantageous plan available.

screenshot 2023 10 27 182632

DEADLINES

October 31, 2022 –
Personal Property and Second Half Real Estate Taxes are due
October 31, 2022 –
Unclaimed Property Reporting deadline – for more information visit http://ucp.dor.wa.gov/app/submit-a-report
December 31, 2022 –
Distribute a notice of eligibility to all eligible employees (for 401k Plans)

YEAR END ITEMS TO BE ON THE LOOK OUT FOR

Reporting of Self-Employed Health Insurance Premiums for S Corporation Shareholders – the total premiums paid must be reported as wages on Form W-2. Be sure to coordinate with your payroll provider. For Dental Accounting Pros clients, we will be in touch early December to be sure you have reported for 2023.

2024 Salary Schedules for S Corporations or Family Members on Payroll – For those whom we provide recommended salary and withholding levels, updated schedules will be sent to you in mid-December. Be sure to watch for this important document and have it established with your payroll company for the first payroll run in 2024. If you would like us to enter this into payroll on your behalf, we request that you specifically let us know that, as we otherwise will not alter wage and tax withholding.

List of Assets Clean-Up – Near the end of the year, we will be sending you a copy of your most recent list of practice assets. Reviewing this and letting us know of any assets that are no longer in service – whether sold, scrapped, broken, obsolete, etc. – is key to making sure we capture all depreciation deductions. If we prepare your annual Personal Property Affidavit for the county, this is also the same schedule that the county uses to assess your personal property taxes.

WORKING INTERVIEWS AND PAYROLL

Many dentists use “working interviews” as a way to vet prospective employees and see how they perform in a clinical setting. Any compensation for such interviews should be done through payroll, the same as with any employee. This includes all payroll taxes and withholding, and the interviewee should be issued a W-2 the following January. During the interview, they are operating under your guidance and supervision, and the IRS and state payroll agencies will no doubt classify them as employees. There is no minimum hours or payment required, and this is true even if you do not end up hiring them.

It requires some extra time up front to obtain a Form W-9 and enter them in your payroll system, but it can save many headaches later should you be audited for payroll compliance or should they be injured while in the working interview.

CHART OF ACCOUNTS UPDATE

We are currently standardizing the chart of accounts in QuickBooks for all clients. The chart of accounts is the listing of codes used to categorize expenses and transactions. By standardizing, we will be able to prepare more comprehensive analyses for you in the future. Many of you will not notice any differences. The biggest change will be where certain items appear on the Profit & Loss statement, such as grouping all staff costs under the same heading, or having all facility-related costs (rent, maintenance, utilities, etc.) appear together. This is merely a formatting issue, but it will allow us (and you) to quickly look at your reports and get a better sense of your overhead and profitability.

Note that some of our clients use 3rd party bookkeepers who may have their own chart of accounts preferences. We will reach out to those we feel could benefit from some changes. Let us know if you have any questions.

POSTING MEALS & ENTERTAINMENT IN QUICKBOOKS

You will notice with the chart of account changes that there are multiple categories for meals and entertainment. As a reminder, we had temporary rules for 2021 and 2022 that allowed for some meals to be fully deducted that would otherwise only be allowed at 50%. Those rules expired at the start of 2023.

With the changes we are making, there will be four categories that meals (and entertainment) could fall under.

• Staff Meeting & Events – things like holiday parties, summer picnics, or occasional team-building type activities, which are 100% deductible. These must be offered to all staff and not be lavish or extravagant.

• Business Meals (50%) – as the heading implies, these are only 50% deductible. This is for meals with vendors, referral sources, or staff where business is conducted during or immediately before or after the meal.

• Business Entertainment (non-deductible) – tickets to sporting events or concerts, or entertainment for non-employees. If an invoice splits the costs of food from the venue rental or other costs, you may deduct the meals portion under the 50% category. But if it is something like a suite at a sporting event that includes food, and the invoice only shows one total price, the entire amount is non-deductible entertainment.

• Owner Draws/Distributions – meals that have no business purpose attached are not deductible and should not even be reported on the Profit & Loss statement. If you pick up a meal while returning from a meeting and eat that meal at your office, unless it meets any of the categories above, it is a non-deductible personal expense.

If you see an expense category that includes both meals and entertainment, that is left over from previous tax rules and should not be used. We can help to deactivate any such accounts. As always, don’t hesitate to ask us if you are not sure how to code an expense.

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3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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Deadlines & Misc.
Third Quarter Estimated Tax Payments are due by Friday, Sept 15, 2023

September 15, 2023 is the deadline for timely filing extended corporate and partnership returns. Fiduciary (trust/estate) returns are due October 2.

2022 RETIREMENT PLANS
Employer contributions for taxyear 2022 are also due on September 15, 2023 for corporations and partnerships. Individual proprietors must make employer contributions by October 16, 2023.

PERSONAL PROPERTY TAX
Second half payments for 2023 (for the 2022 tax assessment) are due October 31, 2023.

UNCLAIMED PROPERTY
Unclaimed property reports are due October 31, 2023 for the reporting period July 1, 2019 through June 30, 2020. The most common unclaimed property items in a dental office are uncashed refund checks to patients.

STUDY CLUBS
If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so.  We can cover a variety of topics including long-term financial planning, transition planning and most popular the new Tax Act – and how it is impacting dentists.

Contact our office for more details. 425.216.1612 or mail@cpa4dds.com

IRS EMPHASIZES IDENTITY PROTECTION PIN PROGRAM 

The IRS has again issued a reminder of their identity protection program, where taxpayers can obtain a special PIN needed to file their tax return. Any attempt to file a return without the proper PIN will automatically be rejected. It helps to prevent fraudulently filed returns that attempt to claim a refund. Should such a return be filed using your Social Security Number, the steps needed to prove your identity can be rather time consuming and will delay your ability to claim your rightful refund. 

There are a few different ways to obtain a PIN. The fastest is using the online tool on the IRS website. It requires you to have an online account, which we have previously discussed here. 

https://sa.www4.irs.gov/icce-core/loac/ippin/pages/ippin.xhtml 

You can also apply using Form 15227, although this is only available to those with income

below $73,000 (single) or $146,000 (married filing joint).

https://www.irs.gov/pub/irs-pdf/f15227.pdf 

The final option is to contact your local IRS office and request an in-person appointment.

ROTH 401(K) CATCH-UP CHANGES DELAYED TO 2026
Employees aged 50 and up are allowed to make “catch-up” contributions to their 401(k) plans beyond the annual maximum. Recent Congressional legislation ruled that starting in 2024, employees with wages over $145,000 who want to make catch-up contributions can only do so under a Roth 401(k), meaning they would not get a deduction to their taxable wages.

The initial announcement created a number of questions. What about employers that don’t offer Roth options in their 401(k) plans? Are their highly compensated employees barred from making catch-up contributions? Employers who don’t currently offer a Roth 401(k) but want to do so would have to work quickly to change their plan in time. 

The IRS has listened to the feedback and delayed the implementation two years, now scheduled to begin in 2026. Employers should have enough time to either adopt a new retirement plan or make changes to their existing plan. Further guidance is expected, and additional comments have been requested, so there could still be changes over the next couple years. 

As a reminder, traditional 401(k) contributions reduce the employee’s taxable income in the year of the contribution. The money grows tax-free until distributions are taken (and fully taxed) in retirement. Many people will be in a lower tax bracket in retirement. Thus, they get a deduction during their high-bracket years and delay the taxation until a lower-bracket year. 

Roth contributions work in the opposite way. You do not get to deduct your contributions, but when you take the distributions in retirement, the entire amount is tax-free (assuming it has been in the Roth IRA for a specified time period and other conditions are met). 

Tax Cuts Expire After 2025 

Many of the tax cuts that went into place in 2017 are temporary and will expire after December 31, 2025. Since the cuts were enacted, we have always included the condition “pending further legislation.” Back in 2017, that seemed like a long time for things to happen. But as we get closer to 2025 with still no additional legislation, we should operate with the assumption that tax rates will increase in a couple years. 

Ordinarily, we advise taxpayers to delay recognition of income and accelerate deductions. However, when tax rates go up, you could be better off doing the opposite: have your income taxed now when rates are low, and hold off on deductions until rates are higher. So if you can time things like Roth IRA conversions or large equipment purchases over the next couple years, keep the changing tax landscape in mind. 

Of course, financial decisions should never be made solely because of the tax ramifications. Buy that new piece of equipment when you need it, not just because there is a potential tax savings to be had.

THIRD QUARTER 2023 ESTIMATED PAYMENTS

***THIS IS ONLY FOR THOSE THAT PAY BY QUARTERLY INSTALLMENTS***

We highly encourage that estimated payments be made online at EFTPS.gov – this very convenient site allows you to enter multiple payments and dates in advance. Call us if you need help!

However, if you still prefer to mail in a paper check:

If we have prepared your 2022 return, you will find pre-printed estimated tax payment vouchers in your TaxCaddy account or in your folder if we mailed your tax return to you. Otherwise, detach or photocopy the voucher below.

  1. Complete the name, address and social security number sections.
  2. Fill in amount (call us at 425.216.1612 if you have questions regarding the amount).
  3. Address your envelope to:

Internal Revenue Service
PO Box 802502
Cincinnati, OH 45280-2502

      4. Make your check payable to the United States Treasury.
      5. Note your social security number and “2023 1040-ES” on the memo line of your check.
      6. Enclose the voucher and check in your envelope addressed to the Internal Revenue Service (see above).
      7. Mail on or before Friday, September 15, 2023.



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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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Deadlines & Misc.
First Quarter 2023 Estimated Tax Payments are due by Tuesday, April 18, 2023.  See Below.

INCOME TAX RETURNS
Tuesday, April 18 is the deadline for timely filing or extending individual income tax returns. In order to avoid penalties and/or interest, 2022 tax due must be paid with the filed return or extension by April 18.

Personal Property Tax
First half taxes are due on or before May 1, 2023. Personal property affidavits are also due May 1, 2023.

STUDY CLUBS
If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so.  We can cover a variety of topics including long-term financial planning, transition planning and most popular the new Tax Act – and how it is impacting dentists.

Contact our office for more details. 425.216.1612 or mail@cpa4dds.com

Washington State Capital Gains Tax
In a bit of a surprise, the State Supreme Court has upheld the capital gains tax, meaning the first payments under the new tax are due on April 18th, 2023.  There are numerous exceptions to the tax, such as sales of real estate, depreciable assets used in a business, the gain from selling certain small businesses, and assets held in retirement accounts, and we continue to believe that the majority of our clients will not be impacted.

However, this is an unprecedented step in taxing the income of individuals and represents a new source of state revenue.  Many fear that it will lead the way to a full-blown state income tax.  Officially, the tax is labeled an excise tax, more like a sales tax than a tax on income.  Income taxes remain unconstitutional in Washington.

For now, the tax is 7% on net long-term capital gains above $250,000, although critics also point out that there is little to stop the state from increasing the tax percentage, reducing the income threshold, or both.

If your net long-term capital gains as shown on your federal income tax return are less than $250,000 in a given year, you do not owe the Washington capital gains tax, nor are you required to file anything with the state.  Even if your net long-term gains exceed $250,000, if some of those gains result from excluded types of property such that your gains subject to the state tax are less than $250,000, you are also exempt from any state tax or filing requirements.  However, in some scenarios it may be advisable to still file a state return showing your total net long-term capital gains, then backing out those gains not subject to the state tax.

If you file an extension on your federal income tax return, you are also granted an extension for filing the state return.  However, it only extends the time to file, not the time to pay.  If you owe under the state capital gains tax, that must still be paid on or before April 15th each year (April 18th this year, due to the 15th falling on a weekend).  You would need to estimate your final liability, with any potential overpayment being refunded when you ultimately file.

The filing of the return and payments are made through the State Department of Revenue website.  Visit https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax for more information.

UNRECEIVED EMPLOYEE RETENTION CREDITS
By now, most have received refund checks for the employee retention credit.  However, the IRS has indicated that with the massive influx of amended payroll tax returns (which all had to be paper filed and manually processed), some may have been lost in the shuffle.

If you are still waiting for your refund, we may want to consider filing the returns again.  There is no real harm in doing so, other than the processing time and mailing costs.  In any event, the statute of limitations for amending payroll returns is three years after the return is filed.  For quarterly payroll returns, the “deemed” filing date is April 15th of the following year, regardless of the quarter.  So, if you have an unpaid claim for quarter 2 of 2020, for example, and the IRS has no record of it on file, we would need to file again before April 15th, 2024.

IRS ONLINE ACCOUNTS
The ability to establish an individual online account with the IRS has been around for several years.  It can be a useful tool for making estimated payments, verifying those payments already made, and ensuring that payments are being applied to the proper tax period.  If you have been subject to identify fraud, it can also be used to quickly retrieve the PIN number you need to file your return in case you lost the mailed version or never received it from the IRS (a new PIN is issued each year for victims of identity fraud).

In cases where we need to contact the IRS on your behalf, you can use your account to quickly grant us power of attorney rights instead of having to print, sign, and return physical versions of the forms.  With the increase in the number of clients needing IRS assistance, this can be a real time saver.

The benefits of an online account do not come without some cautions, though.  The sign-up process can be tricky to navigate at times.  It also uses the vendor ID.me for its verification process, which made headlines last year for its use of facial recognition technology.  You are not required to use this facial recognition feature, but opting out will increase the amount of time needed to create an account.  These are all factors to weigh when deciding whether to create an account.

***BELOW IS ONLY FOR THOSE THAT PAY BY QUARTERLY INSTALLMENTS***

We highly encourage that estimated payments be made online at EFTPS.gov – this very convenient site allows you to enter multiple payments and dates in advance. Call us if you need help!

However, if you still prefer to mail in a paper check:

If we have prepared your 2022 return, you will find pre-printed estimated tax payment vouchers in your TaxCaddy account or in your folder if we mailed your tax return to you. Otherwise, detach or photocopy the voucher below.

  1. Complete the name, address and social security number sections.
  2. Fill in amount (call us at 425.216.1612 if you have questions regarding the amount).
  3. Address your envelope to:

Internal Revenue Service
PO Box 802502
Cincinnati, OH 45280-2502

  1. Make your check payable to the United States Treasury.
  2. Note your social security number and “2023 1040-ES” on the memo line of your check.
  3. Enclose the voucher and check in your envelope addressed to the Internal Revenue Service (see above).
  4. Mail on or before Tuesday, April 18, 2023.
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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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DEADLINES

  • June 15, 2023 Quarter 2 Estimated Tax Payments

QUICKBOOKS

QuickBooks Pro 2023 is now available for purchase.  Please update to QuickBooks 2023 if you are currently using 2021 or older.  Or talk with us regarding switching to QuickBooks Online – this may be the best option for most!

IRS STANDARD AUTO MILEAGE RATE

The standard reimbursement rate for automobiles is 65.5 cents per mile for 2023.

Washington Long-Term Care Tax Returns
The employment tax designated to fund long-term care for Washington residents has had a bumpy history.  First passed in 2019, the tax went into effect for nearly all Washington employees in January of 2022.  After much feedback, the program was quickly revised, and all amounts that had been withheld from paychecks were refunded to employees.

Extra time was needed to iron out numerous provisions, and the implementation was pushed back to a July 2023 start date, which is rapidly approaching.  As we had a “trial run” for the withholding in 2022, most payroll providers should be well equipped to process the 0.58%  employee withholding starting in July.

As a reminder, a limited exemption was available for those who already had long-term care insurance through a private provider.  That coverage had to be in place prior to November 1, 2021, and employees had to apply for the exemption between October 2021 and December 2022.  If you did not meet the requirements and/or apply for the exemption, you are no longer eligible to opt out using the private coverage exemption.  If you did apply for an exemption, you should have received a response from the Employment Security Division which must be provided to your employer to let them know not to withhold from your paycheck.

If you are self-employed and do not receive a W-2 paycheck (owners of a partnership and sole-proprietors), you are not required to pay into the program but may choose to do so.  This election must be made prior to January 1, 2025, or within three years of becoming self-employed for the first time.

Meals deduction back to 50%
The past two years saw a temporary provision that allowed businesses to deduct 100% of expenses paid to restaurants instead of the standard 50%.  That expired December 31, 2022, so be sure you return to using the proper 50% expense category in QuickBooks.  Many of you setup temporary 100% accounts to use in 2021 and 2022, and those accounts can be deactivated in QuickBooks to avoid accidentally posting entries there.  Let us know if you need help with this step.

BONUS DEPRECIATION AND SECTION 179
Part of the tax reform changes of 2018 greatly enhanced the opportunities for businesses to write off the entire cost of fixed assets in the year of acquisition.  Absent this provision, the deductions would come in the form of depreciation over the life of the asset.  This 100% bonus depreciation expired on January 1, 2023, and you can now deduct only 80% of the asset in the year of acquisition. As we have seen, the further out we project, there is always a chance that tax laws could change.  But as it stands now, here is a reminder of the amount of bonus depreciation you can claim:

Asset placed in

service through

Bonus

Depreciation

December 31, 2022

100%

December 31, 2023

80%

December 31, 2024

60%

December 31, 2025

40%

December 31, 2026

20%

Section 179:  Similar to bonus depreciation is Section 179, which allows the full cost of an asset to be written off in the year of purchase.  Now that bonus depreciation is no longer 100%, many businesses will instead choose to claim Section 179 depreciation.

However, there are limits to how much can be claimed under Section 179, and a business must have positive income to get any 179 benefits.  Certain types of assets, such as real estate, may qualify under one method but not the other.  Furthermore, you can pick and choose which assets to apply Section 179 to, but bonus depreciation must be applied to all assets within a given class (or none, if you opt out).

QUICKBOOKS DESKTOP DISCONTINUATION
If you are using QuickBooks Desktop version 2020 or earlier, you will need to upgrade to a newer version or convert to QuickBooks Online (ask us how to help with the online conversion.  It is quick and simple to do and comes with many time saving features).  Effective May 31, 2023, Desktop 2020 features such as Intuit tech support or online integration with payroll, bank feeds, etc. will no longer be available.

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adcpa logo
wsdapreferred

Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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DEADLINES

January 31, 2023:

  • Deadline for all Forms 1099-NEC filing including e-filed forms
  • Deadline for all payroll tax reports, W-2’s & W-3

February 28, 2023:

  • Deadline for 1099-MISC if paper filing

March 15, 2023:

  • Deadline for filing S-Corp and Partnership Tax Returns or Extensions

March 31, 2023:

  • Deadline for 1099-MISC if e-filing

QUICKBOOKS

QuickBooks Pro 2023 is now available for purchase.  Please update to QuickBooks 2023 if you are currently using 2021 or older.  Or talk with us regarding switching to QuickBooks Online – this may be the best option for most!

IRS STANDARD AUTO MILEAGE RATE

The standard reimbursement rate for automobiles is 62.5 cents per mile for 2022 (post July 1) and 65.5 cents per mile for 2023.

WA LONG TERM CARE TAX

Washington implemented an additional payroll tax in 2022 to cover a long-term medical care program. With many complaints about the program, it was delayed shortly after going into effect with amounts withheld returned to employees.

The tax is set to go into effect again starting July 1, 2023. Most major payroll providers should already be prepared for this, but it might not hurt to reach out them before then. You may also want to remind your employees that they will see an additional 0.58% withheld from their paychecks later this year. As with the previous implementation, employers do not pay any of the tax.

Employees can opt out of the program, but they must have purchased their own long-term care coverage from a private insurer prior to December 31, 2022. The only remaining ways for employees to opt out is if they:

  1. have a permanent residence in another state,
  2. are working in Washington under a temporary visa,
  3. are the spouse or registered domestic partner of an active-duty military member, or
  4. are a veteran with a 70% or greater service-connected disability

SALARY SCHEDULES FOR OFFICERS

Salary schedules for corporate officers have been mailed out for the year 2023. Please be sure you have changed your salary and withholding per this schedule with your payroll company. If uncertain, please contact us as soon as possible.

PAYROLL TAX RATE NOTICES

State Unemployment and L&I Rate notices for 2023 have been mailed by the State. Please be sure to forward these to your payroll company as soon as possible.

UNANIMOUS CONSENT FORMS FOR CORPORATIONS

If you have received any correspondence from your attorney regarding unanimous consent or annual minutes for your business entity, please be sure to forward it to us. We prepare the information as we complete the business return and will provide that to you for signature and return mailing to the attorney.

FORMS 1099-MISC (Those you receive)

All Dental Practices will receive Forms 1099 from third party payers. In most cases, you need only collect these and keep them in a safe place. However, there are instances where the payer may withhold federal income tax from the payment they make to you and that withheld tax will be reported on Forms 1099. You may want to peruse your 1099s to be sure tax is not reported and to make sure that there are no interest or dividend 1099s mixed in with your healthcare services 1099s. Interest and dividends will need to be reported on your applicable tax return. If you find any 1099s with withholding and/or any types of 1099s other than healthcare services, please be sure to forward these to us so that we can report it on your tax return and contact that payor to correct their records, so they no longer withhold tax from your payments.

BONUS DEPRECIATION AND SECTION 179

Part of the tax reform changes of 2018 greatly enhanced the opportunities for businesses to write off the entire cost of fixed assets in the year of acquisition.  Absent this provision, the deductions would come in the form of depreciation over the life of the asset.  This 100% bonus depreciation expired on January 1, 2023, and you can now deduct only 80% of the asset in the year of acquisition. As we have seen, the further out we project, there is always a chance that tax laws could change.  But as it stands now, here is a reminder of the amount of bonus depreciation you can claim:

 

Asset placed in

service through

Bonus

Depreciation

December 31, 2022

100%

December 31, 2023

80%

December 31, 2024

60%

December 31, 2025

40%

December 31, 2026

20%

Section 179:  Similar to bonus depreciation is Section 179, which allows the full cost of an asset to be written off in the year of purchase.  Now that bonus depreciation is no longer 100%, many businesses will instead choose to claim Section 179 depreciation.

 

However, there are limits to how much can be claimed under Section 179, and a business must have positive income to get any 179 benefits.  Certain types of assets, such as real estate, may qualify under one method but not the other.  Furthermore, you can pick and choose which assets to apply Section 179 to, but bonus depreciation must be applied to all assets within a given class (or none, if you opt out).

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agd preferred provider blue
adcpa logo
wsdapreferred

Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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