The ADA News talked with Allen Schiff, a CPA and Academy of Dental CPAs president, about what's new for 2022 and 2023 when filing your taxes.
New treatment for Research and Development Tax Credit expenses
If your dental practice qualified for the Research and Development Tax Credit, or R&D Credit, be aware that effective Jan. 1, 2022, you could still take the tax credit if your dental practice qualifies, Mr. Schiff said. However, under the Tax Cuts and Jobs Act of 2017 — also known as the new tax law — dentists will have to capitalize such costs and amortize them over a five-year period. As a result of this change in the tax law, this is how the amortization schedule of the 2022 R & D costs will look over the next five years.
Small employer pension plan start-up changes
The Setting Every Community Up for Retirement Enhancement Act 2.0, or SECURE Act 2.0, was updated and signed into law in 2022. This law offers a tax credit to help dental practices that set up a new retirement plan for 2022. Dentists who started their practice’s first SIMPLE or 401(k) plan in 2022 and have less than 100 employees can qualify for a tax credit of at least $500 tax credit up to a maximum of $5,000 for each of the first three years of the new plan. This tax credit can be applied to 50% of qualified business’ SIMPLE or 401(k) costs such as plan setup and administration. Remember: For tax purposes, a tax credit is better than a tax deduction.
Required minimum distributions
The SECURE Act 2.0 also creates new strategies for required minimum distributions. When do I have to take my taxable required minimum distribution? – For your first required minimum distribution, the tax deadline is April 1 of the year following you reach your required minimum distribution Age, Mr. Schiff said. Please see the chart below for when you have to take your RMD.
