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Tax Planning Strategies That Improve Cash Flow for Dental Practices

A busy day in a dental practice might include hygiene appointments, restorative procedures, insurance coordination, and conversations about treatment plans. Behind every one of those interactions is a financial system that supports the practice, from payroll and equipment costs to patient billing and reimbursements.

Because dentistry operates on tight schedules and steady cash movement, taxes play an important role in the practice’s overall financial stability. Every procedure, insurance reimbursement, and patient payment contributes to the practice’s income and ultimately affects its tax obligations.

Many dental practice owners approach taxes as a once-a-year obligation tied to filing a tax return. In reality, tax planning plays a significant role in how cash moves through the practice throughout the tax year. When tax strategies are reviewed consistently during the calendar year, dentists gain greater control over tax liabilities, improve cash flow, and build a stronger financial structure for long-term growth.

Dental Accounting Group in Bellevue, WA works exclusively with dental professionals. Through proactive planning, custom financial reporting, and strategic advisory support, dental practices gain a clear view of their financial situation and the steps that can help them manage taxes effectively.

Why Tax Planning Matters for Dental Practice Cash Flow

Taxes influence nearly every aspect of a practice’s financial structure. A dental office generates income through patient payments and insurance reimbursements while also managing expenses related to staffing, equipment, technology, and supplies. Each of these factors contributes to taxable income and affects the final tax bill.

Without proactive planning, dentists often discover tax obligations after the year has already closed. At that point, options for adjusting deductions or implementing tax strategies are limited.

When tax planning takes place throughout the current year, dental practices gain opportunities to manage their gross income, review deductible expenses, and adjust financial decisions before filing the next return. This approach helps stabilize cash flow and supports the practice’s financial goals.

Proactive planning also helps dentists anticipate tax payments and avoid unexpected financial strain when tax deadlines arrive. For dental practices working with a dental-focused accounting partner, these reviews can happen consistently throughout the year, helping practice owners understand how financial decisions today may influence tax obligations and cash flow later.

What Is Proactive Tax Planning?

Proactive tax planning involves reviewing financial activity regularly throughout the year and identifying opportunities to improve tax efficiency. Instead of waiting for a tax preparer to compile numbers after the fact, dentists work with a tax advisor or tax professional who helps guide financial decisions in real time.

This process includes reviewing financial statements, tracking adjusted gross income, analyzing practice expenses, and planning how business income will affect the practice owner’s personal tax situation.

The goal is clear. Dentists want to reduce unnecessary tax burden while maintaining full tax compliance under current tax laws in the United States.

Proactive planning also allows the accounting team to evaluate the practice’s tax bracket, estimate potential tax liabilities, and explore legitimate opportunities for tax savings before the end of the year. A dental accounting team that reviews financial activity regularly can help practice owners identify these opportunities earlier, allowing tax strategies to be implemented before the year closes.

How Taxes Affect the Cash Flow of Dental Practices

Cash flow determines how easily a dental practice can pay team members, invest in equipment, and maintain daily operations. Taxes influence that cash flow in several ways.

First, taxes determine how much income remains available after expenses. When tax liabilities are higher than expected, the practice may need to divert funds that were originally allocated for other priorities.

Second, taxes influence planning decisions related to investments and long-term financial goals. For example, contributions to retirement accounts, including a traditional IRA or Roth IRA, may provide both retirement planning benefits and tax advantages.

Third, taxes affect how dentists structure financial decisions throughout the year. Equipment purchases, property taxes, payroll adjustments, and other deductible expenses can influence taxable income.

With careful planning, dentists gain more control over these variables and protect the financial stability of their practice. With guidance from a dental CPA who understands the financial structure of dental practices, these variables can be reviewed throughout the year to support healthier cash flow and more predictable financial planning.

How Strategic Tax Planning Reduces Financial Surprises

Unexpected tax bills create stress for many business owners. Dental professionals often experience this challenge when tax planning occurs only after the calendar year ends.

Regular financial reviews with a tax advisor help eliminate these surprises. Instead of reacting to numbers during tax season, dentists monitor financial activity throughout the year.

This process may involve reviewing estimated income tax obligations, tracking tax withholding estimator calculations, and evaluating potential deductions related to business expenses.

A proactive approach helps dental practices maintain awareness of their tax situation and adjust financial decisions before deadlines approach. As a result, tax payments become predictable and easier to manage within the practice’s cash flow structure. Ongoing communication with a dental accounting advisor helps ensure that potential tax obligations are reviewed early, giving practice owners time to adjust financial decisions before deadlines arrive.

What Financial Areas Should Dental Practices Review During the Tax Year?

Effective tax planning involves several areas of financial review. Dental Accounting Group encourages dentists to monitor financial records and practice performance consistently throughout the year.

Important areas of focus often include:

  • Tracking deductible expenses related to equipment, supplies, and operations
  • Reviewing tax records and financial statements regularly
  • Monitoring changes in income that may affect the practice’s tax bracket
  • Evaluating opportunities for tax credits and available deductions
  • Reviewing payroll structures and tax withholding requirements
  • Planning retirement contributions through retirement accounts

These ongoing reviews help the accounting team identify opportunities for tax savings while maintaining compliance with current tax code requirements. Reviewing these areas with an experienced dental accounting team allows practice owners to stay organized while identifying opportunities for tax savings that align with the practice’s broader financial goals.

How Do Tax Strategies Support Long-Term Financial Goals?

Tax strategies influence both short-term cash flow and long-term financial stability. Dentists who plan ahead gain the ability to align financial decisions with their broader professional goals.

For example, retirement planning often plays a major role in tax strategy. Contributions to an individual retirement account or employer-sponsored retirement plan may reduce taxable income while helping dentists build long-term savings.

Other planning considerations may include:

  • Structuring business income to improve tax efficiency
  • Reviewing capital gains tax implications for investments
  • Monitoring investment earnings from mutual funds or other financial assets
  • Evaluating deductions related to property taxes or mortgage interest
  • Planning charitable donations or charitable contributions

These decisions influence how income is taxed and how financial resources accumulate over time. A thoughtful tax strategy allows dentists to pursue financial goals while maintaining a clear understanding of how tax obligations affect those plans.

With consistent financial reporting and advisory support, dentists can evaluate these strategies with clarity and ensure that tax decisions support both short-term operations and long-term financial planning.

Why Dental Practices Benefit From Specialized Tax Expertise

Dentistry presents unique financial challenges compared with many other industries. Dental practices manage a blend of healthcare services, insurance reimbursements, and private patient payments. Equipment investments and facility costs also contribute to complex financial structures.

A tax preparer or accounting firm that works specifically with dental professionals understands these patterns. A dental CPA recognizes how financial reports, payroll, and insurance billing influence the practice’s taxable income.

Specialized dental accounting services allow the accounting team to analyze financial data within the context of the dental industry. This perspective supports more effective tax planning and stronger financial management.

For dental practice owners, working with an experienced accounting partner provides reassurance that financial decisions align with both industry realities and current tax laws.

What Role Does Communication Play in Effective Tax Planning?

Strong communication between the dental practice and the accounting team remains essential for effective planning.

Tax planning requires up-to-date information about revenue, expenses, and operational changes within the practice. When dentists communicate regularly with their accounting advisor, financial decisions can be evaluated quickly and accurately.

This collaborative approach allows the accounting team to review financial statements, track changes in income, and provide guidance before the tax year ends.

Consistent communication also supports better decision-making. Dentists gain clarity about how equipment purchases, payroll adjustments, or other financial actions may influence their tax situation.

Can Tax Planning Improve Profitability for Dental Practices?

Yes. Strategic tax planning helps dental practices retain more of their income by identifying opportunities for tax efficiency while maintaining full compliance with federal and state requirements.

When dentists work with a qualified tax professional throughout the year, they gain visibility into their financial performance and the tax implications of business decisions. This awareness supports better cash flow management, reduces unnecessary tax burden, and strengthens overall profitability.

Partner With Dental Accounting Group for Strategic Tax Planning

Dental practice owners benefit from financial guidance that extends beyond basic tax preparation. A proactive approach to tax planning supports clearer financial management, stronger cash flow, and greater confidence in long-term planning.

Dental Accounting Group provides accounting and advisory services built specifically for dental professionals. From dental-specific bookkeeping and payroll coordination to financial reporting and strategic advisory support, the firm helps dentists maintain organized financial records and make informed financial decisions.

By reviewing financial activity throughout the year, the team helps dental practices identify tax strategies, monitor tax liabilities, and prepare for upcoming tax obligations with clarity.

Connect with Dental Accounting Group to learn how specialized dental accounting services can support your practice’s goals.

Disclaimer: This article is intended for general informational purposes only and does not constitute legal, tax, or professional advice. Every situation is unique, and tax laws are subject to change. You should consult with a qualified tax professional or CPA regarding your specific circumstances before making any decisions based on this information. This content is provided in accordance with AICPA professional standards and does not create a client relationship with Dental Accounting Group.

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Washington State Capitol building representing the Millionaires Tax legislation SB 6346

Senate Bill 6346, the Millionaires Tax, has now passed both chambers of the Washington State Legislature. The bill passed the Senate on February 16, 2026 (27-22), and after a 25-hour marathon debate, passed the House on March 10, 2026 (51-46) with no Republican support and eight Democrats voting against. Because the House made significant amendments, the bill must return to the Senate for a concurrence vote before going to Governor Ferguson’s desk. The legislative session ends March 12, 2026. Senate concurrence is widely expected given the original 27-22 vote, and Governor Ferguson has publicly committed to signing the revised bill into law.

BREAKING: On March 10, 2026, after a record 25-hour floor debate, the Washington State House passed SB 6346 by a 51-46 vote. Governor Bob Ferguson has pledged to sign it. If enacted, this will be Washington’s first-ever personal income tax.

Disclaimer: SB 6346 has passed both chambers and is expected to be signed into law imminently. This summary reflects the bill as passed by the House on March 10, 2026 and is subject to change pending Senate concurrence and Governor signature. Constitutional challenges are anticipated and could affect the law’s ultimate enforceability. This is not legal or tax advice. 

What Is the Washington Millionaires Tax?

SB 6346 imposes a 9.9% tax on household adjusted gross income (AGI) above $1 million per year. It is projected to affect approximately 30,000 households statewide — less than 0.5% of Washington residents. The tax is scheduled to take effect January 1, 2028, with first payments due in 2029. We estimate that about 1% of our clients will be impacted. 

Key Provisions at a Glance

Tax Rate9.9% on household adjusted gross income above $1 million per year
Who Is AffectedApproximately 30,000 households — less than 0.5% of Washington residents
Effective DateJanuary 1, 2028, with first tax payments due in 2029
Standard Deduction$1 million per household (inflation-adjusted after 2030)
Charitable DeductionUp to $100,000 for donations to Washington nonprofits
Tax CreditsCredits available for WA capital gains tax paid, B&O taxes paid, and income taxes paid to other states (nonrefundable, no carryforward)
Non-ResidentsTaxed only on Washington-sourced income; those working in WA fewer than 5 days are exempt
Long-Term Cap GainsMost long-term capital gains excluded from the tax base (unless already subject to WA capital gains tax)
Small Business ReliefB&O tax exemption for businesses grossing under $300,000 starting in 2029 — roughly 65% of all WA businesses
Legal StatusIncludes a ‘necessity clause’ to shield from referendum — challenges expected in court and via ballot initiative
Pass-Through ImpactS-corp and PLLC owners with K-1 income pushing household income above $1 million will be directly affected

What This Means for Dental Practice Owners

This is no longer a proposal to monitor — it is on the verge of becoming law. Washington has been one of nine states with no personal income tax, making it a longstanding haven for high-earning professionals. Dental practice owners whose total household income exceeds $1 million annually need to factor this new tax into their financial planning starting in 2028.

Action Steps for High-Earning Practice Owners

  • If your household income is over $1m annually, we will take this new law into account during your 2028 tax projection. You can also schedule a meeting with your Client Advisor to model your potential tax exposure under this new law and stress-test different income scenarios.
  • Review the timing of income recognition — income recognized before January 1, 2028 is not subject to the new tax. This is especially relevant for practice sales, stock option exercises, bonus deferrals, and installment sale elections.
  • Evaluate available tax credits: B&O taxes paid and Washington capital gains taxes paid may be credited against your millionaires tax liability, potentially reducing your net exposure.
  • Understand how your entity structure (S-Corp vs Sole Proprietor) interacts with this new tax and whether any restructuring makes sense for your situation.
  • Be aware that constitutional challenges are anticipated — Republican lawmakers have signaled immediate court action — but do not rely on a legal reversal as a planning strategy.

Disclaimer: SB 6346 has passed both chambers and is expected to be signed into law imminently. This summary reflects the bill as passed by the Washington State House on March 10, 2026, and is subject to change pending Senate concurrence and Governor signature. Constitutional challenges are anticipated. This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Consult a qualified professional for guidance specific to your situation. © 2026 DG Accounting Professionals LLC.

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Understanding your sales and use tax obligations in Washington State is essential for maintaining compliance and avoiding costly penalties. Whether you operate a dental practice, professional services firm, or retail business, staying current with these requirements can save you significant time and money.

This guide breaks down everything you need to know about Washington’s sales and use tax system, including recent legislative changes that took effect in late 2025.

Understanding Sales and Use Tax in Washington

What Is Sales Tax?

Sales tax is imposed on retail sales of most goods and certain services in Washington State. When your business sells taxable items or services to customers, you must collect the applicable sales tax at the point of sale and remit it to the Washington Department of Revenue (DOR).

The combined state and local sales tax rates vary by location, ranging from 6.5% (the state base rate) to over 10.5% in some areas, such as parts of King County. It’s important to apply the correct rate based on where the sale occurs. 

What Is Use Tax?

Use tax serves as the counterpart to sales tax. It applies when your business purchases taxable goods or services from out-of-state vendors (or in-state vendors who fail to charge sales tax) and uses those items in Washington.

The use tax rate equals the sales tax rate that would have applied if the purchase had been made locally. Business owners are responsible for self-reporting and remitting use tax on their Combined Excise Tax Return.

Who Is Subject to Sales and Use Tax?

Washington businesses are generally subject to sales and use tax obligations if they meet any of the following criteria:

•       Have a physical presence in Washington (office, employees, inventory, or business location)

•       Meet the economic nexus threshold of $100,000 or more in gross receipts sourced to Washington in the current or prior year

•       Sell taxable goods or services to Washington customers

•       Purchase items or services for use in Washington without paying sales tax

Special Considerations for Dental Practices and Service Businesses

While professional dental services are generally not subject to sales tax, practices must still collect sales tax on certain retail items sold to patients, such as oral care products sold over the counter. Additionally, dental practices must pay use tax on business purchases where applicable, including acquired assets when buying a practice.

Service businesses like dental practices are also subject to a state (and sometimes city) Business and Occupation (B&O) tax on gross receipts. This typically ranges from 1.5% to 2%, depending on the location of the business and whether there is an applicable city tax rate.

Recent Changes: ESSB 5814 and New Sales Tax Categories

Effective October 1, 2025, Washington’s ESSB 5814 extended retail sales tax to several new categories that may significantly impact your business operations.

Advertising Services Now Subject to Sales Tax

The new law broadly defines taxable advertising services as “all digital and nondigital services related to the creation, preparation, production, or dissemination of advertisements.” This encompasses a wide range of activities, including:

•       Website development and design

•       Logo design and branding

•       Search engine optimization (SEO) services

•       Acquisition of advertising space

•       Consulting and advice on advertising methods

Live Presentations and Speaking Engagements

Seminars, workshops, and continuing education events where participants attend in-person or via real-time telecommunication are now subject to sales tax. This has important implications for professionals who receive compensation for speaking engagements—they must now collect and remit sales tax to the Department of Revenue.

What Remains Exempt

Several advertising-related categories remain exempt from sales tax:

•       Radio and television advertisements

•       Newspapers

•       Fixed signage such as billboards

•       In-store displays

Outside of these specific exceptions, the State generally assumes that anything related to advertising is subject to sales tax.

What to Look For: Ensuring Compliance

While vendors are responsible for collecting sales tax, many may not yet be aware of the new rules—particularly if you work with out-of-state vendors. Here’s what you should do:

1.    Review your advertising invoices to verify whether sales tax is being charged.

2.    Contact vendors who aren’t charging sales tax to understand their reasoning. They may have a valid exemption (such as minimal presence in Washington) or may have inadvertently omitted the tax.

3.    Self-report use tax on your Combined Excise Tax Return if vendors legitimately cannot charge sales tax.

The Combined Excise Tax Return

Washington does not have a state income tax. Instead, businesses file a Combined Excise Tax Return that includes:

•       Business & Occupation (B&O) Tax – A gross receipts tax on business activities

•       Retail Sales Tax – Tax collected from customers on taxable sales

•       Use Tax – Self-reported tax on out-of-state or untaxed purchases

•       Other applicable state and local taxes

All registered Washington businesses must file this return, even if they had no business activity during the reporting period. This is known as a “no business activity” return.

Filing Frequencies and Due Dates

The Department of Revenue assigns filing frequencies based on your estimated annual tax liability:

Filing Frequency

Business Size

Due Date

Monthly

Higher volume businesses

25th of following month

Quarterly

Mid-range businesses

Last day of month after quarter

Annual

Smaller businesses

April 15 / January 31

Note: Due dates falling on weekends or holidays extend to the next business day.

Late Filing and Payment Penalties

Timely filing is crucial to avoid escalating penalties. Here’s what you can expect if you miss your deadlines:

Timing

Penalty

After due date

9%

After last day of following month

19%

After 2nd month following due date

29%

Interest (2025 rate)

7% annually

Additionally, interest accrues at approximately 7% annually (2025 rate) on unpaid tax balances.

Next Steps for Your Business

Staying compliant with Washington’s sales and use tax requirements requires ongoing attention, especially with the recent legislative changes. We recommend reviewing your current practices, auditing your vendor invoices for proper tax collection, and ensuring your bookkeeping processes capture any use tax obligations.

If you work with a bookkeeping team, make sure to notify them of any invoices requiring use tax treatment so they can properly record the expense and include the tax on your next excise tax return.

Disclaimer

This article is
for informational and educational purposes only and should not be construed as
specific accounting, legal, or tax advice. Tax laws and interpretations may
change, and specific situations may warrant different approaches. The
information provided herein does not create a client relationship and is not a
substitute for professional consultation. Please consult with a qualified
accounting professional to discuss how these requirements apply to your
specific circumstances.

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How to Complete Your 401(k) Annual Census: A Step-by-Step Checklist

If your company sponsors a 401(k) plan, submitting accurate annual census data to your Third-Party Administrator (TPA) is one of the most important tasks in your retirement plan administration process. This data drives everything from employer match calculations to required 401k compliance testing—and delays can lead to costly errors.

In this guide, we’ll walk you through exactly what information your TPA needs and how to ensure your TPA census submission is complete and on time.

What Is a 401(k) Annual Census?

A 401(k) annual census is a comprehensive report of employee data that your TPA uses to:

  • Perform required compliance testing (ADP, ACP, top-heavy tests)
  • Calculate employer matching contributions accurately
  • Determine participant vesting percentages
  • Identify highly compensated employees (HCEs) and key employees
  • Prepare your plan’s annual Form 5500 filing

The census includes data for all employees—not just those participating in the plan—because eligibility and testing requirements apply company-wide.

What to Include in Your 401k Census Checklist

While specific requirements may vary based on your plan document, most TPA census submissions require the following categories of information.

  1. Employee Identifying Information

For every employee on your payroll during the plan year, provide:

  • Full legal name
  • Social Security number or employee ID
  • Date of birth
  • Original date of hire (even if the employee was rehired)
  • Termination date and/or rehire date, if applicable
  • Current employment status (active, terminated, retired, deceased, on leave)
  1. Compensation Data

Compensation figures are critical for employer match calculations and compliance testing. Be sure to use the compensation definition specified in your plan document, which may differ from W-2 wages.

  • Gross compensation for the plan year
  • Bonuses, overtime, and commissions (if tracked separately per plan terms)
  1. Hours and Service Information

Hours worked are essential for determining eligibility and vesting. Even salaried employees may need hours tracked depending on your plan’s requirements.

  • Total hours worked during the plan year
  • Hours for part-time and salaried/exempt employees
  1. Ownership and Related Party Information

This information is used to identify highly compensated employees (HCEs) and key employees for 401k compliance testing.

  • Ownership percentage for each owner
  • Family relationships to owners (spouse, child, parent, grandparent)
  • Controlled group or affiliated service group details, if applicable
  1. Deferral and Contribution Data

Include payroll-related contribution information:

  • Pre-tax deferral amounts by employee
  • Roth deferral amounts by employee
  • Catch-up contributions for employees age 50 and older
  • Loan repayments processed through payroll (if applicable)

Common 401(k) Census Mistakes to Avoid

Even experienced plan sponsors can make errors in their retirement plan census submissions. Watch out for these common pitfalls:

  • Omitting terminated employees — They must still be reported for the plan year.
  • Using the wrong compensation definition — Always refer to your plan document.
  • Excluding hours for salaried employees — Many plans still require this data.
  • Outdated ownership percentages — Update after any business changes.
  • Late submissions — This delays compliance testing and contribution calculations.

5 Tips for a Smooth TPA Census Submission

  1. Request your TPA’s census template early — Each TPA may have specific formatting requirements.
  2. Coordinate with your payroll provider — Many payroll systems can export census data in the required format.
  3. Review data for accuracy before submitting — Double-check compensation figures and employee counts.
  4. Include all employees — Even those who didn’t participate or who terminated during the year.
  5. Submit as early as possible — This allows time for questions, corrections, and timely filings.

Why Timing Matters for Your 401k Plan Administration

Your TPA manages census data for many plans simultaneously during peak filing season. Submitting your 401(k) annual census promptly ensures your plan receives the attention it needs and helps avoid:

  • Delayed employer contribution calculations
  • Rushed compliance testing that may miss errors
  • Late Form 5500 filings and potential penalties
  • Additional stress during an already busy time

Next Steps

Completing your 401k census checklist doesn’t have to be overwhelming. Start by contacting your TPA to confirm their specific requirements, then work with your payroll provider to gather the necessary data.

If you have questions about preparing your retirement plan census or need assistance with your 401k plan administration, contact your TPA for guidance.

Disclaimer: This article is provided for general informational and educational purposes only and does not constitute legal, tax, or professional advice. Plan requirements vary based on individual plan documents and applicable regulations. Please consult with your TPA, legal counsel, or qualified retirement plan advisor for guidance specific to your situation. This content is intended to assist with understanding 401(k) census requirements but does not guarantee compliance with ERISA, IRS, or DOL requirements.

401(k) Annual Census Submission Checklist: Click Here to access a copy of the below checklist resource in PDF format.

Use this checklist to ensure you submit complete and accurate census data to your Third-Party Administrator (TPA). Timely submission helps ensure accurate contribution calculations, proper compliance testing, and on-time Form 5500 filing.

Section 1: Employee Identifying Information

Provide the following for ALL employees—not just plan participants:

 

Employee Identifying Information

☐

Full legal name

☐

Social Security number (or employee ID)

☐

Date of birth

☐

Date of hire (original hire date, even if rehired)

☐

Date of termination, if applicable

☐

Date of rehire, if applicable

☐

Employment status (active, terminated, deceased, retired, on leave)

Section 2: Compensation Data

Compensation must match the definition in your plan document, which may differ from W-2 wages:

 

Compensation Data

☐

Gross compensation for the plan year (per plan document definition)

☐

Bonus amounts (if tracked separately per plan terms)

☐

Overtime pay (if tracked separately per plan terms)

☐

Commissions (if tracked separately per plan terms)

Section 3: Hours and Service Information

Hours are required for eligibility and vesting calculations, even for salaried employees:

 

Service Information

☐

Total hours worked during the plan year

☐

Hours tracked for salaried/exempt employees (if required by plan)

☐

Hours for part-time employees

Section 4: Ownership and Related Party Information

Required for highly compensated employee (HCE) and key employee testing:

 

Ownership Information

☐

Ownership percentage for each owner

☐

Family relationships to owners (spouse, child, parent, grandparent)

☐

Any changes in ownership during the plan year

☐

Controlled group or affiliated service group information (if applicable)

Section 5: Deferral and Contribution Data

Provide payroll-related contribution information:

 

Contribution Data

☐

Pre-tax deferral amounts by employee

☐

Roth deferral amounts by employee

☐

Catch-up contributions (for employees age 50+)

☐

Loan repayments processed through payroll (if applicable)

Section 6: Before You Submit

 

Final Review

☐

Verify ALL employees are included (including terminated employees)

☐

Confirm compensation definition matches plan document

☐

Review ownership percentages for accuracy

☐

Use TPA’s preferred format or template

☐

Submit data to TPA ASAP to ensure timely filings

Helpful Tips

• Contact your TPA early to request their specific census template.

• Coordinate with your payroll provider to export data in the required format.

• Don’t forget terminated employees — they must be reported for the plan year.

• Submit early to allow time for questions and corrections.

Questions? Contact your TPA for assistance.

Disclaimer: This checklist is provided for general informational and educational purposes only and does not constitute legal, tax, or professional advice. Plan requirements vary based on plan documents and applicable regulations. Please consult with your TPA, legal counsel, or qualified retirement plan advisor for guidance specific to your plan. This document is intended to assist with compliance but does not guarantee compliance with ERISA, IRS, or DOL requirements.

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Understanding the IRS Math and Taxpayer Help Act

If you’ve ever received an IRS notice claiming there was a “math error” on your tax return—only to be left scratching your head about what actually went wrong—you’re not alone. For years, dental practice owners and other taxpayers have been frustrated by vague IRS notices that provide little explanation and even less guidance on how to respond.

That’s about to change.

What Is the IRS MATH Act?

On December 1, 2025, President Trump signed the Internal Revenue Service Math and Taxpayer Help Act (IRS MATH Act) into law. This bipartisan legislation passed unanimously in both the House and Senate, reflecting broad agreement that taxpayers deserve straightforward, transparent communication from the IRS.

The law, which takes effect on December 1, 2026, requires the IRS to provide specific, detailed explanations when it adjusts a tax return for a mathematical or clerical error. No more guessing games about what triggered the change or how much you owe.

What Changes Under the New Law?

When the IRS MATH Act goes into effect, math error notices must include:

Plain language explanations. The IRS must describe the error clearly, including the specific Internal Revenue Code section and the exact line on your tax return where the issue occurred.

Itemized calculations. You’ll receive a detailed breakdown showing exactly how the IRS computed the proposed adjustment and how it affects your return.

Prominent deadlines. The 60-day window to challenge the adjustment must appear in bold on the first page of the notice. This is critical because failing to respond within this timeframe typically means losing your right to contest the assessment in U.S. Tax Court.

Clear response procedures. The notice must explain how you can request an abatement—whether in writing, electronically, by phone, or in person.

Specific error identification. The IRS can no longer send you a list of possible errors. They must identify the exact issue on your return.

The law also establishes a pilot program to test whether sending these notices by certified mail improves delivery and response rates.

Why This Matters for Your Dental Practice

Math error notices are more common than many practice owners realize. According to IRS data, over one million of these notices were sent during the 2023 tax year alone. For busy dental professionals managing patient care, staff, and business operations, receiving a confusing IRS notice can be stressful and time-consuming.

Under the old system, many taxpayers simply accepted the IRS adjustment because they couldn’t figure out what had gone wrong or didn’t realize they had a limited window to respond. The IRS MATH Act levels the playing field by giving you the information you need to understand the situation and make an informed decision about whether to challenge it.

What Should You Do Now?

While this law won’t take effect until late 2026, here’s what you can do in the meantime:
If you receive a math error notice before the new rules take effect, review it carefully and contact your tax advisor promptly. Remember that you typically have only 60 days to dispute the assessment. Keep thorough records of all tax return documentation, which will make it easier to respond to any IRS inquiries. If you’re having difficulty resolving an IRS issue, the Taxpayer Advocate Service (TAS) is a resource that can help you navigate the process.

We’re Here to Help

At Dental Accounting Group, we monitor tax law changes that affect dental practices so you can focus on what you do best—caring for your patients. If you receive an IRS notice or have questions about how tax changes might affect your practice, our team is ready to assist.

Sources:

Disclaimer: This article is intended for general informational purposes only and does not constitute legal, tax, or professional advice. Every situation is unique, and tax laws are subject to change. You should consult with a qualified tax professional or CPA regarding your specific circumstances before making any decisions based on this information. This content is provided in accordance with AICPA professional standards and does not create a client relationship with Dental Accounting Group.

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ESSB 5814 Tax Guidance for Dental Study Clubs: What Dentists Need to Know Before October 1, 2025

Washington State’s Engrossed Substitute Senate Bill 5814 introduces significant changes to how professional services are taxed, particularly affecting dental study clubs and continuing education presentations. This article provides our interpretation of the new law and practical guidance for navigating these changes while protecting your interests.

Key Tax Changes Effective October 1, 2025

The new law extends retail sales tax to “live presentations,” defined in RCW 82.04.050(3)(l) as:

“Live presentations including, but not limited to, lectures, seminars, workshops, or courses where participants attend either in-person or via the internet or telecommunications equipment that allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time”

This creates three distinct scenarios for dental practices:

  1. Study Club Membership Dues: We advise these remain non-taxable (explained below)
  2. Speaking Fees Paid to Presenters: Must include sales tax
  3. Event-Specific Attendance Fees: Subject to sales tax

Our Position: Study Club Dues Are Not Subject to Sales Tax

The Dental Accounting Group takes the position that annual study club membership dues should not be subject to retail sales tax, based on careful analysis of ESSB 5814’s language and structure. Here’s our reasoning:

Legal Basis for the Dues Exemption

The statute specifically targets “live presentations” as discrete, identifiable services. Annual membership dues represent a fundamentally different transaction:

  1. Bundle of Rights Specific Service: Membership dues provide access to multiple benefits including networking opportunities, resource libraries, practice management support, and potential attendance at presentations. They do not constitute payment for any specific “live presentation.”
  2. Timing Distinction: The law contemplates real-time presentations with defined start and end times. Annual dues are paid without reference to specific events, often before any presentations are
  3. Allocation Complexity:
    • Many study clubs allocate dues across multiple purposes: Administrative costs (30-40%)
    •  Venue and hospitality (20-30%)
    •  Materials and resources (15-20%)  Speaker fees (15-30%)

Since only a portion relates to presentations, taxing the entire dues amount would exceed the statute’s scope.

Supporting Arguments

The statute taxes “charges for” live presentations, not general membership fees. Just as country club dues aren’t subject to sales tax despite members using taxable facilities, study club dues represent membership in an organization rather than payment for specific taxable services.

No Department of Revenue guidance contradicts this interpretation. Until specific regulations address membership organizations, reasonable interpretations favoring taxpayers should prevail.

Clear Taxable Transactions: Speaker Fees and Attendance Charges

While we defend the dues exemption, two scenarios clearly trigger sales tax obligations:

1.  Speaking Fees (Paid to Presenters)

Under RCW 82.04.050(3)(l), any dentist or professional receiving compensation for delivering a live presentation must charge sales tax. This includes:

  • Hourly or daily speaking fees  Flat-rate presentation charges
  • Travel stipends tied to speaking engagements
  • Any compensation for real-time educational delivery

Example: Dr. Smith receives $2,000 to present at your study club. She must invoice $2,000 plus applicable sales tax (6.5-10.5% depending on location).

2.  Event-Specific Attendance Fees

When charging non-members to attend specific presentations, sales tax applies:

  • Single-event registration fees
  • Guest attendance charges
  • Workshop-specific fees beyond regular dues

Example: Your study club charges $150 for non-members to attend a hands-on workshop. You must collect sales tax on this amount.

Compliance Strategies for Different Scenarios

For Study Club Operators

Current Approach (Until Further Guidance):

  • Continue collecting annual dues without sales tax
  • Maintain clear documentation showing dues cover multiple benefits
  • Segregate presentation costs in your accounting records

When Hiring Speakers:

  • Require all speakers to include sales tax on their invoices
  • If speakers fail to charge tax, self-report use tax on the untaxed amount
  • Document all speaker agreements specifying tax obligations

For Individual Events:

  • Any charges specifically for attending presentations must include sales tax
  • Create separate fee structures for “membership” versus “event attendance”

For Dentists Who Present

If You Receive Speaking Fees:

  • Register for Washington sales tax collection immediately
  • Add applicable sales tax to all speaking fee invoices
  • Specify on invoices: “Sales tax per RCW 82.04.050(3)(l)”

Calculation Methods:

  1. Add-On Method: Quote $2,000 + sales tax
  1. Inclusive Method: Quote $2,130 with tax included (must “back out” tax: $2,130 ÷ 1.105 = $1,927.60 taxable amount; $202.40 tax due)

Exemptions and Special Circumstances

What Remains Exempt

The following are NOT subject to the new retail sales tax:

  1. Telehealth Services: Patient consultations via video or phone (RCW 04.192(3)(b)(xi))
  2. Educational Institutions: Presentations by accredited colleges/universities to their students
  3. Internal Training: Employee education provided without charge
  4. Pre-Recorded Content: Asynchronous online courses without real-time interaction

Gray Areas Requiring Caution

  • Hybrid Events: Mixing business meetings with educational content
  • Sponsorship Payments: May avoid tax if not tied to specific presentations
  • Material Sales: Books and supplies remain subject to existing sales tax rules

Practical Implementation Timeline

Before October 1, 2025:

  1. Review Current Structure: Document how your study club operates and allocates funds
  2. Update Agreements: Revise speaker contracts to specify tax obligations
  3. Adjust Invoicing: Implement systems to collect tax on taxable transactions
  4. Communicate Changes: Inform members about new requirements

Ongoing Compliance:

  • Track Department of Revenue guidance for updates
  • Maintain clear records distinguishing dues from event fees  Report and remit collected taxes timely
  • Self-assess use tax on untaxed speaker fees

Risk Management Recommendations

Documentation Best Practices

Maintain records showing:

  • Membership benefits beyond presentations
  • Allocation of dues to various purposes
  • Clear separation between dues and event fees
  • Speaker agreements with tax provisions

Audit Defense Preparation

The Department of Revenue will likely scrutinize professional organizations. Prepare by:

  • Establishing written policies before October 1
  • Consistently applying your tax treatment
  • Documenting the business purpose of all transactions
  • Retaining professional tax guidance 

Conclusion and Action Steps

The Dental Accounting Group believes thoughtful structuring can minimize the tax impact of ESSB 5814 on dental study clubs. By distinguishing general membership dues from specific presentation charges, clubs can maintain their current dues structure while ensuring compliance on clearly taxable transactions.

Immediate Actions Required:

  1. Study Club Operators: Document your dues structure and update speaker agreements
  2. Presenters: Register for sales tax collection before accepting October engagements. No action is needed if you have historically accepted speaking fees through your dental practice entity, just make note to report speaking fees on your Sales Tax / B&O filing.

We will monitor Department of Revenue guidance and update our recommendations accordingly. This reasonable interpretation balances compliance with practical business operations while we await specific regulatory clarification.

Please contact our office to discuss your specific situation. As your trusted advisors, we’re committed to helping you navigate these changes efficiently and defensively.

Sincerely,

The Dental Accounting Group

Disclaimer: This article represents our current interpretation of ESSB 5814 based on the statutory language and existing Department of Revenue practices. Tax laws and interpretations may change, and specific situations may warrant different approaches. This article is for educational purposes only. Please reach out to your tax advisor accordingly. 

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The OBBB (Oh-Triple-Bee as we are starting to call it) Act officially passed and signed into law on July 4th, 2025 by the President. We have been diligently reviewing source material to craft our tax planning approach for 2025 and future years. Please note that we are still waiting for additional IRS guidance, but in the interim, here is a short summary of the key tax provisions:

Key Takeaways for Dentists:

  • Tax rates from the 2017 Tax Cuts & Jobs Act made permanent
    • 10%, 12%, 22%, 24%, 32%, 35%, and 37%
    • Enhanced inflation adjustment for 10%/12%/22% brackets.
  • Qualified Business Income Deduction made permanent at 20%
  • State and Local Tax (SALT) limit raised to $40k ($20K MFS) with a phase-down over $500k of Modified Adjusted Gross Income. Reverts back to $10k in 2030.
  • SALT cap increases 1% per year starting in 2025 through 2029

The Pass-Through Entity (PTE) tax work around was on the chopping block, but in the final Senate version this tax saving strategy for business owners was saved, which will benefit high-earning practice owners in income tax states like California and Montana.

  • Child tax credit increased to $2,200 per child, adjusted for inflation thereafter. Phase out begins at $400k Modified Adjusted Gross Income (if filing jointly).
  • Trump Retirement & Savings Account (Trump Account) is introduced – Invest up to $5,000 per child per year until the child turns 18. Funds must be invested in US stock market index funds. The US Government will give $1,000 per baby born between 2025 – 2028.
    • Employers can make up to $2,500 in nontaxable contributions per employee. We need more guidance from the IRS regarding compliance.
    • Trump accounts grow tax-deferred until the beneficiary withdraws the money.
  • Expanding the use of section 529 tax-advantaged savings accounts for qualified higher education expenses, including “qualified postsecondary credentialing expenses” related to professional licensure. We believe CE programs like AGD, Spears and KOIS fall under this new definition. 
  • Charitable deductions: Under OBBBA, the deduction has been expanded to include a permanent “above-the-line” deduction for taxpayers who do not itemize their deductions. Beginning in 2026, taxpayers who do not itemize can claim a deduction of up to $1,000 ($2,000 for those taxpayers who are married filing jointly) for certain charitable contributions. Taxpayers who itemize are subject to a 0.5% floor of their modified adjusted gross income. For example, a household with $300k in MAGI would not be able to deduct the first $1,500 in charitable contributions. New carryover rules would also apply. OBBBA also makes the 60% contribution limit for cash gifts to qualified charities permanent.
  • Green energy tax credits are repealed including electric vehicle credits, installation of home EV charging equipment, and some residential energy credits such as insulation, windows, or energy efficient heating and cooling systems (including solar). Most Inflation Reduction Act (IRA) credits will terminate 2025-2027. 
  • Exemption for overtime pay up to $12,500 per year (2025 to 2028) via a tax deduction (above the line). Must be reported on Form W-2 (waiting on additional guidance).
  • Above the line deduction for auto loan interest up to $10,000 per year (2025 – 2028). The car must be new (not used) and be assembled in the United States.  EV cars are eligible. Debt must have been incurred after 12/31/24. Deduction is completely phased out when income is over $150k ($250k married filing jointly)
  • Senior Citizens aged 65 and older will get an additional $6,000 added to their standard deduction (in an effort to offer relief to those collecting Social Security (2025 – 2028).
  • Health Savings Account (HSA) changes – expanded coverage & eligibility.
  • Employer education plans paying student loan payments – extended permanently.
  • Increasing the filing threshold for Forms 1099-NEC and Forms 1099-MISC from $600 to $2,000, adjusted for inflation.
  • The 100% depreciation deduction is now permanent. This replaces the phase-down of 40% for property after January 19, 2025.
    • A temporary 100% expensing for qualifying structures that start construction in 2025-2028 will be granted.
  • The OBBB Act overhauls federal student loan repayment by eliminating all existing Income-Driven Repayment (IDR) plans and replacing them with the standard repayment plan and the Repayment Assistance Plan (RAP). While RAP caps monthly payments at 10% of discretionary income, it extends the repayment period to 30 years (360 payments) before any remaining balance is forgiven, compared to current plans that offer forgiveness after 10-25 years.
  • The temporary increase to the estate and gift tax exemption has been made permanent and increased further to $15 million.
  • Higher exemptions and phase-out thresholds for the Alternative Minimum Tax have been made permanent, meaning very few taxpayers will be subject to it.
  • Total itemized deductions are subject to a new phase-out for higher incomes. The otherwise allowable deduction is reduced by 2/37 of the lesser of (1) the amount of the itemized deductions or (2) the amount of the taxpayer’s taxable income that exceeds the start of the 37% tax rate bracket.

Impact for Dental Practice Owners:

Most of our clients will continue to benefit from key tax provisions passed in the original Tax Cuts and Jobs Act (TCJA) from 2017. We continue to review text from the One Big Beautiful Bill Act and participate in CPA industry group discussions. We will keep you updated as information becomes available from the IRS.

Any Questions? Feel free to reach out to our office.

-Your Dental Accounting Group

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2025 brings some notable changes to local taxes in Washington State. 

Capital Gains Tax 

The Washington capital gains tax has been in place for a few years now.  Washington taxpayers are subject to a 7% tax on long-term capital gains that exceed an annual threshold (currently $270,000).  An additional 2.9% tax is now being added for taxable gains above $1 million.  This retroactively applies to any gains realized as of January 1, 2025. 

With the annual exemption, this essentially means you must have long-term capital gains of $1,270,000 before the additional tax applies.  The first $270,000 is still exempt, and gains from $270,000 – $1,270,000 are still taxed at 7%.  Only the gains exceeding this amount are taxed at 9.9%. 

There are no changes to the existing exemptions and deductions, such as gains on real estate, retirement accounts, and qualified family-owned small businesses. 

Estate Tax 

Many are aware of the increased federal estate tax exemption.  When someone dies, they can leave assets to their heirs without paying any estate tax as long as the estate is under $13.99 million (or $27.98 for a married couple).  This effectively means that very few people need to worry about the federal estate tax.  (Note that this is currently scheduled to sharply decrease next year, although legislation is currently in the works that could extend it). 

However, many states also have a state estate tax, including Washington.  The state exemption is currently much lower, at $2.193 million and has been unchanged for several years.  It will increase to $3 million on July 1, 2025, and it will be indexed to inflation each subsequent year.  Note that unlike the federal exemption, this is not “portable” between spouses, meaning you cannot double the exemption to get $6 million per couple.  When the first spouse dies, everything can pass to the surviving spouse tax free.  But when the second spouse dies, they will only be entitled to a $3 million exemption, the same as someone who was never married. 

While the increased exemption will allow more people in the state to avoid the state estate tax, once you are above that exemption, the rate at which you pay the estate tax is increasing.  Similar to the federal income tax, the state uses progressive brackets where larger estates pay a larger percentage in taxes.  The rates currently range from 10%-20%, but the top bracket will now increase to 35%. 

Taxable Estate (amount above exemption) 

Current Rates 

Rate as of 7/1/25 

<$1m 

10% 

10% 

$1m – $2m 

14% 

15% 

$2m – $3m 

15% 

17% 

$3m – $4m 

16% 

19% 

$4m – $6m 

18% 

23% 

$6m – $7m 

19% 

26% 

$7m – $9m 

19.5% 

30% 

>$9m 

20% 

35% 

Business owners can also take advantage of another exclusion, if the value of the business owned makes up over 50% of the taxable estate and has been actively operated by the decedent or a family member for at least five of the previous eight years.  Currently, you can exclude $2.5 million of the business from your total estate value.  That amount is increasing to $3 million. 

However, if the business is later sold, or the business no longer qualifies within three years of death, the State can go back and assess tax on the business as if it had been included in the taxable estate. 

Should you have any questions on these tax changes, or how you can best plan to limit your exposure, please do not hesitate to reach out to us. 

 

 

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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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Questions?  Please email us at ma**@*****ds.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: ma**@*****ds.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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Questions?  Please email us at ma**@*****ds.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: ma**@*****ds.com