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The Research and Development (R&D) tax credit has long been a valuable incentive for businesses investing in innovation. However, recent changes to tax law have significantly reduced its benefit for most dental practices. Specifically, under the new amortization rules introduced by the Tax Cuts and Jobs Act (TCJA) of 2017 (effective in 2022), expenses eligible for the R&D tax credit must now be amortized over five years instead of being deducted in full in the year incurred.
This creates a major trade-off for dentists. The same dollar spent that qualifies for an R&D credit can no longer be deducted immediately as a business expense. While the tax credit itself is often more valuable than a deduction, the amortization requirement means the benefit is spread over multiple years. Since a dollar of tax savings today is worth more than the same dollar in the future (due to the time value of money), this delay significantly reduces the practical benefit of claiming the credit.
Additionally, most dental practices do not engage in the level of technological or scientific experimentation required to qualify for the R&D tax credit. Even those that do may face heightened IRS scrutiny, as the agency frequently overturns claims from businesses that fail to meet the strict requirements. An audit could result in repaying the credit, plus penalties and interest.
Given these factors, we generally advise dentists against pursuing the R&D tax credit. The lost deduction, delayed benefit, and audit risk make it an unattractive option for most practices. Instead, we recommend focusing on other tax-saving strategies better suited to the dental industry’s financial landscape.
Wes knows what's best for dental practices. He's been doing this for a long time and he sees lots of practices. He can tell me how our practice is doing, and what we can do to increase our productivity. With past CPA's, there were no ideas. It was all coming from me, saying "I think I can do better, but I don't know how." I come in to meet with Wes and he says "You CAN do better, and I know how."
PracticeCFO is in hundreds of dental offices around the country. They know what numbers should look like. They know what percentages of payroll, rent and supplies should be, and they will hold you accountable to those numbers, which will really help you stick to your plan and your path of growth and savings. That is invaluable
Whenever something comes up, whether it's building or practice related and we weren't sure where the numbers would go, PracticeCFO has been instrumental in helping us figure that out. I can't say enough of how important that is - that it goes beyond that initial partnership. They make sure this business marriage works.
When I go home from work, I don't spend a whole lot of time stressing about what my books look like, or how much I owe in taxes. By using PracticeCFO, the burden of keeping track of a lot of the big financial numbers and metrics are taken off my plate.
PracticeCFO helped me develop a plan for the future. I have colleagues that work with other accountants that don't have a plan - they just look at the numbers of the practice and that's it. There's no plan for 10, 20 years from now. But with PracticeCFO, you get that. PracticeCFO makes you feel like you're they're only client.
(In reference to his practice sale) What could've been super stressful, wasn't! When picking John and Wes, it was from word of mouth recommendations and other people's experiences from the past that really did it for me. And it turns out that those recommendations were right on the line.
Wes knows the business side of dentistry. His comprehensive plan will organize your personal and professional finances so you can focus on taking care of patients. Massive ROI.
I can’t say enough good things about everyone at PracticeCFO. Everyone on the team is professional, organized, knowledgeable, helpful and kind. They also respond to emails and phone calls immediately and are always happy to help. They have helped me navigate year-to-year as a business owner. PracticeCFO gives me peace of mind that my business is in good hands.
I love Practice CFO! They have helped me obtain a practice and maintain a practice. They are incredible people who are on top of everything and make owning and running the business portion of a practice easy. They couldn’t be better for my business and my sanity. They have every detail of the business and taxes taken care of where all I have to do is show up and follow their easy steps to success!
Practice CFO has the best tools I’ve seen for personal tax and financial planning in addition to top-tier corporate tax and accounting services. I have been very pleased with the level of quality service. They manage my monthly bookkeeping and accounts payable. It is a great system and saves me a ton of time, and it allows us to have monthly financial statements within a week of month end.
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