The American Dental Association said theTax Cuts and Jobs Act, which was passed by the United States House of Representatives and Senate on Dec. 20, and signed by President Donald Trump two days later, should benefit the majority of dentists and their practices.
In an email to ADA members, Mike Graham, ADA senior vice president of government and public affairs, wrote that advocacy efforts were instrumental in ensuring provisions benefiting dentists were specifically considered in the development of the final tax bill. He went on to explain that it’s important for all dentists and dental practices to research how the new legislation will impact, as many factors—including geographic location, property ownership and family structure—will determine each dentist’s monetary tax benefit.
While it seems as if the bill has a lot of pluses, Graham wrote that there could be some dentists who could be negatively impacted. “Although we acknowledge the positive aspects of the tax bill for the majority of our dental practices, we ar aware that there may also be unintended policy outcomes from this legislation,” Mr. Graham said. “We will work to ensure that dental practices and the patients they serve are not harmed by these unintended policy outcomes.”
He went on to add that the ADA will continue in 2018 to advocate for a five-year reauthorization of the Children’s Health Insurance Program, Action for Dental Health programs, student loan issues and funding for community health centers.
Below are the key provisions the ADA listed as having the potential to positively affect the majority of dental practices.
- Improving the cash accounting allowance by allowing corporations and partnerships with corporate partners with average gross receipts up to $25 million to use cash accounting. This would also allow farm corporations and partnerships with gross receipts of up to $25 million to use cash accounting. Eligible businesses could use cash accounting even if they had inventories.
- Improving Section 179 deductions by expanding businesses’ ability to immediately expense some of the costs of qualifying property such as off-the-shelf computer software and some real property. Currently, $500,000 can be expensed unless more than $2 million in property is bought. Under the final tax bill, as much as $1 million could be expensed and expensing would be expanded to include furniture, as well as nonresidential roofs, heating and air conditioning systems, and fire and alarm systems.
- Retaining the student loan interest deduction at its current levels. The bill also maintains current tax law in that graduate students do not have to pay a tax on the tuition they receive as income from educational institutions. Previous versions of the bill had proposed a tax on that income.
- Providing the first ever deduction for all pass-through entities, including S Corporations and sole proprietorships. The deduction is extended to certain professional service businesses, including dentist practices. It would only be fully available for service businesses with annual incomes of $157,500 or less for individual filers or $315,000 for joint/married filers and would phase out for incomes greater than those thresholds.
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