Taxes and retirement planning often stay at the bottom of the list until filing season arrives and the balance due feels larger than expected. Many dentists in private practice face high overhead and uneven cash flow, so every deduction and every retirement contribution may matter.
This guide focuses on dentists who own or co-own a practice, and on associates who pick up separate 1099 work. You will see how the IRS generally treats practice income, which expenses often qualify as business deductions, and which retirement plans may fit common dental practice setups.
📌 Also read: What Kind of Freelancers Can Open a Solo 401k?
How 2026 Taxes Affect Dentists Who Own Their Practice
Dentists in private practice often have more than one stream of income. You might receive W-2 wages from a group practice, collect K-1 income from a partnership, or pick up 1099 income for locum tenens work or consulting. The IRS looks at how you are paid and at your legal structure to decide whether income is treated as ordinary wage income, self-employment income, or pass-through business income.
Business owners who file Schedule C generally pay both ordinary income tax and self-employment tax on net income from the practice. Owners of S corporations or partnerships may receive W-2 wages and also receive pass-through income that is reported in a different section of the return.
📝 Note: Income for contribution purposes is not always the same as total collections. Net income, net adjusted income, and gross income after self-employment tax deductions follow different formulas depending on whether you are a sole proprietor, S corporation, or partnership.
Practice Owner, Associate, or Both?
Your day-to-day role shapes how the IRS expects you to report and pay tax.
✅ If you are a W-2 associate dentist:
- The employer withholds federal income tax, Social Security, and Medicare from each paycheck.
- Unreimbursed clinical expenses are generally not deducted on Schedule C.
- Retirement savings often start with the employer’s 401k or another workplace plan if one is available.
✅ If you own a solo practice or share ownership:
- You report business income and expenses on the forms that match your structure, such as Schedule C for a sole proprietorship or the appropriate partnership or S corporation forms.
- You may deduct ordinary and necessary practice expenses that are directly tied to running your dental office.
- You may also be responsible for self-employment tax on some or all of this income.
Some dentists work both as owners and as associates in the same year. Keeping income streams and expenses in separate categories makes it easier to avoid mixing employee costs with owner costs.
If you receive a Form 1099 for clinical work outside your main practice, that side income often behaves like a separate small business. It usually needs its own records, deductions, and estimated tax planning.
Why Quarterly Estimates Matter for Dentists
Practice income and 1099 work usually do not include automatic withholding. Waiting until tax time may create both a large balance due and an underpayment penalty. The IRS expects many people with non W-2 income to pay as they go using quarterly estimated tax payments.
A simple structure that many practice owners use looks like this:
- Estimate annual profit based on collections, overhead, and debt service.
- Use IRS worksheets or guidance from a professional to compute quarterly estimates.
- Set aside a fixed percentage of each month’s profit in a tax savings account and send payments by each estimated due date.
📝 Note: Income can change quickly if you add an associate, buy into a practice, or expand hours. Reviewing estimates after major changes may reduce surprises at filing time.
Common Deductions for Dental Practice Expenses
Dentistry requires significant spending on equipment, staff, and supplies before a single patient sits down for treatment. Many of these costs may be deductible when they are ordinary and necessary for your dental practice and are properly documented.
📌 Also read: Top 20 Tax Deductions Every Freelancer Should Know for 2026 Taxes
Equipment and Technology in the Operatory
Dental practices rely on clinical and digital equipment. Some purchases act like regular expenses. Others are treated as assets that you recover over time for tax purposes.
Common equipment and technology costs include:
✅ Dental chairs, delivery units, and lights
✅ X-ray systems, CBCT units, and digital sensors
✅ Intraoral scanners, CAD/CAM mills, and impression systems
✅ Sterilizers, compressors, and vacuum systems
✅ Practice management and imaging software licenses
Larger items are often capital assets. The tax rules provide options such as depreciation and, in some cases, accelerated expensing under rules like Section 179 or bonus depreciation. The details depend on the type of property, the amount you spend during the year, and other limits.
Supplies, Lab Work, and Infection Control
Supplies and lab fees are central to dental work and often represent a large share of overhead. Many of these amounts are treated as part of the cost of goods sold or as regular business expenses, depending on how you track inventory.
Typical categories include:
✅ Restorative materials, impression materials, cements, and composites
✅ Anesthetics, burs, handpiece parts, and disposable clinical items
✅ Lab fees for crowns, bridges, dentures, implants, and aligners
✅ Infection control supplies such as gloves, masks, barriers, and sterilization pouches
You do not need complex software. You do need a consistent way to track what you purchase, what you use, and what remains on the shelves at year-end.
People, Premises, and Professional Protection
Beyond clinical items, most dental practices carry overhead that supports patient flow and staff.
Common deductible overhead items include:
✅ Wages for hygienists, assistants, front office staff, and associates
✅ Employer payroll taxes and certain employee benefits
✅ Office rent, utilities, phone service, and internet
✅ Malpractice insurance and general business liability coverage
✅ Merchant processing fees and patient financing program costs
✅ Marketing, website hosting, and online review management
✅ Continuing education courses and related travel that directly relate to maintaining your license
These expenses are often deductible when they are ordinary for a dental practice and necessary to keep the office running.
📝 Note: Auto-pay subscriptions for software, marketing tools, and continuing education platforms can be easy to overlook. Reviewing bank and card statements several times per year may uncover deductions that never made it into your books.
Best Retirement Plans for Dentists
Dentists in private practice often see strong earning years mixed with slower periods. Patient flow, staffing changes, and equipment purchases can shift your cash position from month to month.
Retirement accounts that receive tax-favored treatment may help you set aside money in the years when income is solid. These accounts may also give you a clearer sense of what your future income could look like, although investment growth is never guaranteed.
Choosing a plan usually starts with a few basic questions:
- Do you work alone or have a team?
- How much do you want to contribute based on your income?
- How much administration are you comfortable handling?
- Do you already have a plan through a hospital, DSO, or group practice?
Solo and Small Practice 401k Options
A one-participant 401k, often called a Solo 401k, generally fits dentists who own their practice and have no employees other than a spouse. It works like a traditional 401k, but the plan only covers you as the owner. You may make employee contributions from your compensation and employer contributions from the practice. IRS limits and income rules apply.
Small group practices sometimes choose a traditional or Safe Harbor 401k instead. These plans cover eligible employees and must meet nondiscrimination requirements so contributions do not favor owners over staff.
Potential advantages of a 401k structure include:
✅ Higher combined contribution room when income supports it
✅ Access to Roth features in some plan designs
✅ The option in some cases to add profit-sharing contributions for owners and staff
📝 Note: The IRS uses different definitions of compensation depending on your business type. S corporation owners often use W-2 wages. Sole proprietors usually start with net earnings from self-employment after specific deductions.
SEP IRAs and SIMPLE IRAs for Leaner Administration
Some dentists prefer plans that involve fewer administrative tasks than a full 401k. SEP IRAs and SIMPLE IRAs are two common options for smaller practices.
- A SEP IRA uses employer contributions only. These contributions are based on a percentage of compensation for each eligible employee, including owners, and the percentage must generally be the same for everyone.
- A SIMPLE IRA combines employer contributions with employee salary deferrals and follows its own IRS eligibility and limit rules.
These plans usually require less maintenance than a full 401k. The tradeoff is less flexibility, especially if you hope to contribute very high amounts or want specific plan features.
IRAs for Associates and as a Backstop
Dentists who do not offer a practice retirement plan, such as W-2 or 1099 associates, may still use traditional or Roth IRAs when they meet the eligibility rules. Contribution limits are lower than employer plans, but IRAs still provide a dependable starting point for long-term savings.
Practice owners sometimes use an individual IRA even when they already contribute to a 401k or SEP IRA. It may hold rollovers from past employer plans or provide different investment choices. The tax treatment of contributions and withdrawals depends on your income, filing status, and whether you have access to a workplace plan.
📝 Tip: Each retirement account has detailed IRS rules for eligibility, contribution limits, and required minimum distributions. Review those rules and speak with a qualified professional so you can avoid penalties or excess contributions.
Final Thoughts
Strong tax and retirement outcomes for dentists usually come from systems instead of one-time decisions. Once you understand how your income is taxed and which expenses are deductible, you can build simple routines that support both IRS rules and your long-term goals.
A practical setup many dentists use looks like this:
- Maintain separate bank accounts for operating expenses, tax savings, and owner distributions.
- Transfer a set percentage of each month’s profit into a combined tax and retirement savings account.
- Use that account for quarterly estimated tax payments and for contributions to your 401k, SEP IRA, SIMPLE IRA, or IRA.
- Schedule time each quarter to review profit, overhead, and year-to-date contributions with a tax professional or advisor.
Modest but consistent contributions may create meaningful retirement savings over time, although results vary for each person. Investments can lose value, and there is always a risk of underperforming expectations.
Retirement strategies can be complex, and incorrect setup or execution can lead to tax penalties or missed opportunities. Make sure to talk to a professional who can review your specific situation and confirm that each step you take aligns with current IRS rules and your long-term goals.
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