Dentaltown is the leading online community for dentists and dental professionals around the world.  We have included topical questions and answers from Dentaltown here for your review.

QUESTION:

I am a new graduate and am a full time employee with a company. I was wondering if taxes will really be that complicated for me to begin with or is looking for a CPA a wiser choice? I am not doing anything big as far as investment is concerned for now and focusing on paying back loans ASAP

ANSWER:

Congratulations on your graduation, and its great to hear a new dentist asking the value of tax advice.  Let me give you a brief run down.

When you first start out with a company you will be what is called a W-2 employee.  Your income will continue to grow and it will not be long before you get into the 28% tax bracket (for single filers around $90,000 AGI).  Here tax planning begins to get real, as every $1,000 in deductions can give you $280 cash in your pocket.  The problem with being a W-2 employee is that your planning is somewhat limited and as others have suggested, with a little guidance, you can probably do a fairly decent job all on your own without a CPA if you take the time to research tax strategies on your own.  Some examples are itemizing your deductions as opposed to the standard deduction, maximizing your retirement accounts BEFORE you pay additional money against your student loans, and using a high deductible insurance plan and maxing out your contribution to your health savings account.

Where tax planning gets really fun is when you buy into the practice, begin your family, and have your income take you into the 33% tax bracket (for single filers around $190,000).  There are many more opportunities that most individuals do not fully understand how to implement or the value of a particular course of action.  Here you can have the practice pay for quasi business deductions, restructure your debt portfolio to maximize tax deductions, focus on the timing of recognition of income and expenses, and so on.

Bottom line, if you take the time to learn, you can probably start out doing your own taxes, but know there are a lot of great CPAs out there that can give you a hand if needed.

I hope you find this helpful and good luck on your dental career.