What Are Common Dentist 1099 Deductions?

For dentists who operate as independent contractors and receive a Form 1099-NEC, or those who own their practice as a sole proprietor, understanding business deductions is important. These deductible expenses are the costs incurred in the course of running the dental practice. By subtracting these business expenses from the gross income earned, the resulting net profit is the amount subject to taxation, which can reduce the overall tax liability.

Common Operating and Professional Deductions

The cost of the physical office space, whether through rent payments or mortgage interest on a purchased property, represents a primary operating expense. Utilities such as water, electricity, and gas that power the facility and its equipment are also fully deductible. Property insurance for the office building is another common deduction that falls into this category.

The salaries and wages paid to dental hygienists, assistants, and administrative personnel are deductible business costs. This extends to the employer’s share of payroll taxes, including contributions to Social Security, Medicare (FICA), and federal and state unemployment taxes (FUTA and SUTA).

The materials used in providing dental care are deductible in the year they are purchased. This includes a wide array of consumable items, such as disposable gloves, masks, anesthetics, and materials for creating impressions. Cleaning agents and other disposables used to maintain a sterile clinical environment also fall under this deductible category.

Payments made to external dental laboratories for creating crowns, bridges, dentures, and orthodontic appliances are fully deductible as a cost of doing business.

Administrative costs include general office supplies like paper, pens, and printer ink. The cost of dedicated business telephone lines, internet service, and subscriptions to practice management software, such as Dentrix or Open Dental, are also deductible. Expenses related to marketing and advertising to attract new patients, such as website development, online advertising campaigns, and print materials, are also deductible.

Deducting Equipment and Capital Expenditures

A dental practice’s spending also includes investments in long-term assets known as capital expenditures, which are major purchases of property used for more than one year. A dental chair or a digital X-ray machine are prime examples of such assets, and the tax rules for deducting their costs differ from those for operating expenses.

One method for recovering the cost of these large purchases is through depreciation. This involves spreading the deduction for an asset’s cost over its “useful life,” a period determined by the IRS. For most dental equipment, this falls into a 5 or 7-year depreciation schedule under the Modified Accelerated Cost Recovery System (MACRS), allowing a portion of the asset’s cost to be deducted each year.

A more immediate method for deducting equipment costs is the Section 179 deduction. This means the entire purchase price of an asset can be deducted in the year the equipment is placed in service. For 2025, a practice can deduct up to $1,250,000, provided total equipment purchases do not exceed $3,130,000.

Another accelerated deduction method is bonus depreciation. This allows a business to take an additional first-year deduction on the cost of qualifying new or used business property. This deduction is taken after any Section 179 deduction but before the regular depreciation calculation. The rate is 40% for property placed in service in 2025 and is scheduled to decrease to 20% in 2026.

It is important to note that depreciation is a tax deferral; if the asset is later sold for a gain, that gain may be taxable.

Insurance, Licensing, and Continuing Education Deductions

Maintaining professional standing and protecting the practice involves several specific costs that are deductible. Premiums paid for malpractice insurance, also known as professional liability insurance, are a standard business expense for dentists.

For self-employed dentists, health insurance premiums are deductible. A dentist can typically deduct 100% of the premiums paid for medical, dental, and qualified long-term care insurance for themselves, their spouse, and dependents. This is an above-the-line deduction, meaning it can be taken even if the taxpayer does not itemize deductions on their personal tax return.

The costs associated with maintaining professional credentials are also deductible. This includes fees paid to state dental boards for license renewals and dues for memberships in professional organizations like the American Dental Association (ADA) or local dental societies.

To maintain licensure and stay current with evolving dental techniques, dentists must engage in continuing education. The costs for attending seminars, workshops, and courses that improve skills relevant to the practice are deductible. This also includes subscriptions to professional journals and other publications.

Tax-Advantaged Retirement Savings

Self-employed dentists can reduce their current taxable income by making contributions to a retirement plan. These contributions are generally tax-deductible, lowering the dentist’s adjusted gross income (AGI) while simultaneously building savings for the future.

One common retirement plan for the self-employed is the Simplified Employee Pension, or SEP IRA. This plan allows for contributions for oneself and any eligible employees. The deduction is limited to a certain percentage of the dentist’s net adjusted self-employment income.

Another popular option, particularly for dentists with no employees other than a spouse, is a Solo 401(k) plan. This plan allows the dentist to contribute in two capacities: as an “employee” and as the “employer.” This structure often permits a higher total contribution amount compared to a SEP IRA.

Documenting and Reporting Deductions on Schedule C

To claim these deductions, record-keeping is required. The IRS requires that all claimed business expenses be substantiated with reliable documentation. This involves keeping organized records such as receipts, canceled checks, and bank or credit card statements that clearly identify the business nature of the expense. For vehicle expenses, a contemporaneous mileage log detailing the date, purpose, and miles driven for each business trip is necessary.

Once all income and expenses are gathered and categorized, they are reported on Form 1040, Schedule C, Profit or Loss from Business. Common expenses are reported on specific lines:

• Advertising expenses are entered on Line 8.
• Depreciation from Form 4562 is reported on Line 13.
• Malpractice and business property insurance premiums are entered on Line 15.
• Office rent is placed on Line 20b.
• The costs for dental supplies and materials are reported on Line 22.
• The employer’s share of payroll taxes is deducted on Line 23.
• Wages paid to staff are reported on Line 26.
• Payments for license renewals and continuing education are included in “Other Expenses” on Line 27a.