The Practicon Viewpoint by Ann Page Griffin

NEW TAX LAW INVOLVES CHANGES TO SOME DEDUCTIONS

Confusion reigns concerning the new tax law regulations for deductions for business travel and meals, continuing education expenses, and entertainment. Under the new law, some tax deductions remain the same, some have changed, and others have been eliminated. The clearest, most concise explanation I have read about these deductions that affect virtually every dental practice is in the April issue of The McGill Advisory. A summary follows, but I urge you to access the entire article entitled "How to Get the Biggest Tax Deduction for Business Travel and Meals Under the New Law." Contact information for The McGill Advisory is at the end of this article.

Summarizing The McGill Advisory article:

100% deductible expenses:

• Costs for business travel, lodging, and CE expenses remain 100% deductible.
• Some meal and entertainment expenses are still 100% deductible, including (1) snacks and beverages available for patients in the office reception room and at patient-related events such as open houses, patient appreciation parties, and practice-sponsored events to educate patients about particular treatment modalities, and (2) events for the benefit of staff members, including staff parties, trips, entertainment event tickets, health club memberships, and so on.

Suggestion: Use a separate Chart of Accounts code for the 100% deductible expenses listed above to make certain full deductibility is taken and to separate these expenses from Business Meals which are still 50% deductible.

50% deductible expenses:

• Costs for food and beverages supplied in the office for staff members are 50% deductible, including snacks, meals at staff meetings, take-out lunches to replace a missed lunch break, etc.
• Business meals with patients and/or other health care providers and referral sources and meals while traveling away from home on business-related trips are also 50% deductible.

Deductions which have been eliminated include:

• Entertainment for patients and/or other health care providers or referral sources, including tickets for sporting, theatrical or musical events, hunting, fishing, or sports trips, and so on.

I urge you to discuss this information with your accountant for clarification for your office. Together, you can choose expense codes to clarify the various categories of expense so that costs are properly separated as they are paid throughout the year. Doing so will avoid much confusion and many questions at tax preparation time.

For years I have advised my consulting clients to subscribe to The McGill Advisory, a comprehensive practice and personal/financial management newsletter published monthly. The article about changes in tax deductions in the April issue is an example of why I highly recommend the publication to dentists. Incidentally, I have no connection whatsoever with the McGill organization; I simply urge my clients to take advantage of the valuable information included in each monthly issue. For more information about the McGill Group, The McGill Advisory and how to subscribe, visit the group's website at mcgilladvisory.com or email questions to newsletter@mcgillhillgroup.com.