December 6, 2019
by Jonathan Powell
Kernutt Stokes has the experience to help dental professionals handle the industry-specific complexities they face today. We consult on all aspects of running an office with the goal of enhancing efficiencies and profitability. As your trusted consultant and advisor, we can help guide you through the challenges you face daily in your practice.
For example, did you maximize your tax deductions this past year in regards to IRC Section 199A? IRC Section 199A, more commonly known as Qualified Business Income Deduction (QBI), was created as a result of the Tax Cuts and Jobs Act of 2017. This deduction allows for up to a 20% federal tax deduction on income from a qualified trade or business.
There are many details that determine what a “qualified” trade or business is (which are beyond the scope of this article). Dental practices generally fall into a “bad” category of businesses known as a Specified Service Trade or Business (SSTB). The SSTBs are “bad” in the sense that their deductions are subject to additional income phase outs. SSTBs begin the phase out of the QBI deduction as their taxable income increases beyond $157,500 (Single) or $315,000 (Married Filing Joint). SSTBs are fully phased out as their income reaches $207,500 (Single) or $415,000 (Married Filing Joint).
However, even if your practice is a “bad” SSTB, you may be able to split-off “good” activities that still qualify for the QBI deduction. For example, if your practice manufactures crowns, the “manufacturing activity” may be eligible for the QBI deduction. IRC Regulations under 199A allow for separate business activities to be considered when calculating QBI even if the activities are accounted for within the same legal entity. Furthermore, regulations require strict accounting for qualifying and non-qualifying activities. We can help you determine if a portion of your practice qualifies for the QBI deduction.
From starting-up offices to reorganizing operations in order to capitalize on business opportunities, our team will help you identify your needs and implement a plan that is customized for you. Our timeliness, non-disruptive approach and quality of work are outstanding. We strive to provide useful, progressive guidance to help you keep your business competitive in the challenging world of dental services.
Some of our services included:
- Tax preparation and planning
- Developing long-term strategic plans
- Ensuring proper controls are in place
- Consulting on competitive compensation and benefit programs for your employees
- Advise on progressive cost-containment strategies
- Designing owner compensation programs
- Recommending profit-allocation models for the multi-owner practices
To learn more about Kernutt Stokes’ dental industry services, contact Jonathan Powell at firstname.lastname@example.org or by calling 541.687.1170.