7 Hidden Tax Loopholes Every Dentist Should Use

Highlights:

• Tired of overpaying on taxes? Most dentists miss out on legal tax strategies that could save them thousands.
• 7 overlooked tax loopholes that have helped me and other dental professionals keep more money in our pockets.
• You can legally save money by writing off home rentals or hiring family members.

Let’s be real—taxes are a huge headache for dentists. You work hard, you bring in solid revenue, and then? A massive chunk disappears before it even hits your bank account. It’s frustrating.

1. Choose the Right Business Structure & Cut Your Tax Bill

Let’s be real—most dentists don’t give much thought to their business structure. You set up an LLC or stay a sole proprietor because it’s simple, right? But here’s the kicker: that choice could be costing you thousands in unnecessary taxes.

I learned this the hard way. When I first started out, I was running my practice as an LLC. I didn’t question it because that’s what a lot of dentists do. 

But then my CPA pointed out something game-changing: switching to an S-Corporation could cut my self-employment taxes significantly.

Here’s why:

• LLCs and sole proprietors pay self-employment tax (15.3%) on 100% of their income.
• S-Corp owners only pay self-employment tax on their salary—the rest of their income is taxed at a lower rate.

That one shift saved me thousands in taxes in the first year alone.

Quick Tip: If your practice is making over $100K in profit, talk to a dental-specific CPA about switching to an S-Corp. Not every dentist needs it, but if you do, it’s an easy way to put more money back in your pocket—legally.

Thinking about starting your own practice? Check out my guide on How to Start a Dental Practice for everything you need to know.

2. The Augusta Rule: Get Paid for Using Your Home

This one feels almost too good to be true—but it’s 100% legal and buried right in the tax code. 

It’s called the Augusta Rule. It lets you rent out your home to your business for up to 14 days a year—completely tax-free.

Here’s how it works:

• You host team meetings, training sessions, or even networking events at your house.
• Your practice pays you rent for using your home (which is a tax-deductible business expense).
• But here’s the magic: you don’t have to report that rental income on your personal tax return.

3. Hire Your Kids to Work in Your Practice

This one sounds like a loophole from some tax guru on YouTube. But it’s completely legit—and an easy way to lower your tax bill while helping your kids build wealth early.

Here’s how it works:

• If your kids help out in your practice (filing, cleaning, running social media, stocking supplies, etc.), you can pay them a reasonable wage.
• Their wages become a tax-deductible business expense, lowering your taxable income.
• If they’re under 18 and you’re a sole proprietor or LLC, you don’t have to withhold Social Security or Medicare taxes (that’s an extra 15.3% savings!).
• They can earn up to $14,600 tax-free (2024 standard deduction) and stash it in a Roth IRA—where it grows tax-free for decades.

I know dentists who use this strategy to cover private school tuition, summer camps, and even college savings—all with pre-tax dollars. 

As long as the work is legitimate and you document it properly, it’s a win-win for you and your kids.

Quick Tip: Keep records of the work they do (timesheets, job descriptions, and pay stubs). You don’t want the IRS to think this is just a creative allowance.

Here are two of the best options for dental practice owners:

• Solo 401(k) – If you’re a solo practitioner (no employees), you can contribute as both employer and employee, maxing out your tax savings.
• SEP IRA – Great for dentists with small teams. You can contribute up to 25% of your compensation (up to the $69,000 limit).

Not only does this lower your taxable income today, but it also helps you build long-term wealth in a tax-advantaged way.

I started maxing out my contributions a few years ago, and let’s just say my tax bill dropped significantly. If you’re not doing this yet, you’re leaving serious money on the table.

Quick Tip: Even if you’re just getting started, contribute something. Even a few thousand dollars can make a big dent in your tax bill while setting you up for financial freedom later.

5. Equipment and Technology Deductions (AKA the Section 179 Rule)

New dental equipment isn’t cheap. Chairs, scanners, digital X-ray systems—it all adds up fast. 

But here’s the good news: the IRS lets you write off 100% of these purchases in the year you buy them instead of spreading the deduction over multiple years.

This is thanks to Section 179. It’s a tax rule that helps small business owners (like dentists) invest in their practices. All without taking a massive tax hit. Instead of slowly depreciating expensive equipment over time, you can deduct the full cost upfront. 

6. Hidden Tax-Free Benefits for You and Your Team

Want to save on taxes and keep your team happy at the same time? Stop giving raises that just get eaten up by payroll taxes. 

Instead, use tax-free benefits to put more money in your employees’ pockets—while lowering your taxable income.

I’ve used these strategies to reduce my tax bill while keeping my team engaged and loyal. When employees see that you’re investing in their health and career (without taking it out of their paycheck), it’s a win-win.

Quick Tip: A dental CPA can help you set these up properly so you maximize savings without triggering unexpected tax liabilities.

7. Write Off Travel for Business and CE Courses

If you’re traveling for a conference, CE course, or business meeting, you can write off most of the expenses. And no, this isn’t a loophole. It’s a perfectly legal way to lower your taxable income while learning and networking.

Here’s what qualifies:

• Conference and CE course fees? Deductible.
• Flights, hotels, and transportation? Also deductible.
• Meals while traveling? 50% deductible.

The trick is to plan strategically. 

I always make sure the majority of my trip is business-related so I can maximize deductions. For example, if a CE course is two days long, but I stay for four, I structure my trip so that most of the time is spent on business activities (meetings, networking, practice planning). That way, the IRS sees it as a business trip first, vacation second, which keeps everything compliant.

Quick Tip: Keep detailed records. Save receipts, document the business purpose of the trip, and even keep a simple itinerary. The IRS loves proof.

Want help optimizing your practice finances? You work hard—don’t let unnecessary taxes eat into your profits. A few smart strategies can make a huge difference.

Let’s chat and make sure your practice keeps up with what you earn. 

FAQ

1. Can I deduct student loan payments as a dentist?

No. Student loan payments aren’t deductible for most high-earning dentists due to income limits. However, practice owners may have options. You can create debt repayment strategies to improve cash flow and tax efficiency. A dental CPA can help.

2. Are uniforms and scrubs tax-deductible?

Yes! If your scrubs, lab coats, or work attire are required and not for everyday wear, you can deduct them. Laundry and dry-cleaning costs for work clothing may also qualify.

3. What’s the best way to track tax deductions throughout the year?

Use QuickBooks or Xero to track expenses in real-time. Keep a business credit card for practice-related purchases. Avoid mixing personal and business expenses to make tax season easier.

4. Can I deduct my car if I use it for work?

Yes—but only the portion used exclusively for business. If you drive between office locations, attend CE events, or visit vendors, you can deduct mileage or actual car expenses (gas, maintenance, insurance). Keep a mileage log to stay IRS-compliant.

5. How long should I keep tax records for my practice?

At least seven years. The IRS can audit past returns within three years in most cases. If they suspect major underreporting, they can go back further. Keep digital copies of receipts, tax filings, and expense records just in case.