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Updated October 12, 2022

UPCOMING DEADLINES

• October 17, 2022 – Extended personal tax returns Form 1040 are due
• October 31, 2022 – Personal Property and Real Estate Taxes are due
• October 31, 2022 – Unclaimed Property Reporting deadline – for more information visit https://ucp.dor.wa.gov/app/submit-a-report
• December 1, 2022 – Distribute a notice of eligibility to all eligible employees (for 401k Plans)

RETIREMENT PLAN LIMITS

 

Type	Max Deferral	IF 50+
SIMPLE	$14,000	$17,000
401k	$20,500	$27,000
IRA	$6,000	$7,000

The 2022 maximum total contributions to a defined contribution plan (401k/Profit Sharing, SEP) is $61,000 or $67,500 with an over 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. 

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.  We will be in touch early December to be sure you have reported for 2022.

2023 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 2023.  (We do not automatically enter this data to your payroll provider so you or your bookkeeper will need to do so).

Depreciation Schedule Clean-Up: Near the end of the year, we will be sending you a copy of your most recent depreciation schedule, which lists all the assets currently in use by your practice.  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, this is also the same schedule that the county uses to assess your personal property taxes.

Deferred payroll taxes

For those who took advantage of the pandemic assistance that allowed some employers to defer 2020 payroll taxes, the time is almost here to pay in all such taxes.  The temporary relief allowed for 50% of the deferred amount to be paid back by December 31, 2021, and the remainder is due on December 31, 2022.  Most payroll companies do not automatically process these payments, so it is up to the employer to make sure these are paid back in full by the final deadline.

HHS Reporting – Round 3

Yet another reminder of the reporting requirements for those who received funds from the HHS Provider Relief Fund.  Round 3 of the reporting is for those who received funds between January 1, 2021, and June 30, 2021.  Most dentists received funds under the program in an earlier period, so this will only apply to a small number of our clients.

Reporting for this window was due by September 30, 2022.  However, if you missed the deadline, there is a process for late reporting, which can be done at: https://www.hrsa.gov/provider-relief/reporting-auditing/late-reporting-requests

The next reporting phase opens on January 1, 2023, but again it would be very rare for any dentists to fall under this window.

ASSET PURCHASES AND TAX DEDUCTIONS

Year-end tax planning is a crucial step in managing your tax bill for 2022 and establishing your safe harbor required tax payments or withholding for 2023.  Many dentists are aware that fixed asset purchases along with accelerated depreciation is a useful tool to reduce your taxable income.  This year it is especially important, as bonus depreciation will no longer be 100% of the asset starting January 1, 2023.  It will reduce to 80% in 2023, 60% in 2024, and continue to reduce another 20% each year.

However, you should also be aware of the “placed in service rule” that applies to dental equipment and other “fixed assets”.  In general, fixed assets are those items expected to last longer than a year in the practice – such as dental equipment, office furniture and fixtures, etc. and cost more than $500 per unit.  To be considered “placed in service” the item must be delivered and placed into a state of readiness.  It is not required the item actually be used; rather, just usable.

Consider Equipment Order Lead Times:  With less than three months left in 2022, if you plan to place equipment in service and deduct its cost this year, you will want to consider ordering as soon as possible.  Documenting placement in service can be done with an installation receipt or photograph that includes the date (computer, cell phone, etc.)

Of course, we would urge caution against buying assets solely for a tax deduction.  Such purchases should only be for items that you know you will need or have been thinking about buying.  Particularly for S Corporation owners, you should also be mindful of your “tax basis” in your practice, which could potentially limit the amount of deductions you can take in a given year.  Your basis increases with taxable income and money put into the company.  It decreases with losses or deductions as well as distributions taken out of the company.  Your basis cannot fall below zero, so if you have losses or large distributions, this could result in some unintended tax consequences.  Ask your account manager if you are unsure of your basis amount.