Deductions and Grants – Yours For The Taking!

You could be a manufacturer – at least in the sense of qualifying for the domestic production activities deduction (DPAD). DPAD is a deduction equal to 9% of the net income generated from eligible activities. To be eligible you have to manufacture, produce, grow, or extract property within the United States.

Activities of the dental office that could potentially qualify might include: on-site production of crowns, inlays, onlays, and other restorations using CEREC technology. Operation of in-house labs to produce retainers, study models, and appliances could also qualify.

That said you still avoid the medical device excise tax, since most domestically made dental devices avoid the tax because they are not required to be listed with the FDA. These items are not expected to be taxed: crowns, bridges, dentures, veneers, and orthodontic appliances (retainers etc). As you recall, the excise tax on medical device manufacturers is a 2.3% tax on taxable medical devices intended for humans.

On a separate note, you could also qualify for the Ohio Workers’ Compensation safety grants! The items available for the Safety Grant have changed – they now include items that would assist healthcare offices of all kinds in patient care. To be eligible, you must be current on your BWC premiums, demonstrate a need for a safety intervention, and have active BWC coverage with four past payroll reports for private employers. To get started, review the link on BWC’s website. Gather your information and schedule a visit by a BWC safety consultant before you complete the application. Refer to our blog post from March 25th.

There are significant changes coming to Ohio’s Workers’ Compensation program in 2015. William Vaughan Company will be hosting a free seminar part of our Client Knowledge Series called Modernizing the BWC to be held on September 23, 2014 at Stone Oak Country Club – sign up here!

Attracting & Keeping Patient Requires Repetitive Contacts

The demands of operating a dental practice never leave enough time to strengthen important relationships and reinforce your value. Landing new patients and retaining current ones requires continual nurturing.

When a farmer grows crops, much time and tender loving care are required to ensure a successful harvest. When you reach out to potential patients, it is unreasonable to expect that they are going to stop going to the competition and move to your practice. Patients who have specific needs that are not being met are like low hanging fruit — they are ripe for picking. In addition, existing patients also require some nurturing.

Trickle Marketing

A solution to these dilemmas is to establish a “trickle marketing” campaign for your patients and prospects. Getting in front of your market in a repetitive, yet strategic fashion can lend hand to a change in their dental practice.

This involves sending regular material to maintain a presence. In some cases, this material doesn’t have to be overtly promotional – it can merely educate patients with useful information and demonstrate your professional competence. By doing so, it keeps your practice in the minds of prospects and patients. You are nurturing the relationship the way the farmer cultivates fruit.

Many dental practice send newsletters, tips, article reprints or brochures to their targeted audience. These devices are all useful. The problem is that most practices don’t send this material out frequently enough.

Think of your personal response to direct mail. In many cases, you pitch it in the trash without opening it, especially if you are busy. The pieces you open and notice are probably the ones that were sent multiple times. There is so much mail clutter, that it can take dozens of exposures for your material to gain recognition.

For the typical dental practice, this poses a dilemma. The high cost of printing and mailing marketing material can make repetitive contacts too costly. As a result, your patients and prospects are not getting sufficient touches throughout the year.

Solution: Augment your mailings with an e-mail marketing campaign. The costs are significantly lower when you send your material out via e-mail (see right-hand box for e-mail tips).

The key to staying in front of your current patients and developing prospects is frequency and value. Instituting a trickle marketing campaign for your company can help achieve these goals.

Foreign Bank Accounts and Other Foreign Financial Assets

You must report worldwide income on your US income tax return. If you have an “interest in” a foreign bank or financial account you must check “yes” on Schedule B of your tax return. You may also have to file Form 8938 with your return to report foreign accounts and assets. Additionally, you may have to file an FBAR (114) report separate from your income tax return each year.

The Foreign Account Tax Compliance Act (FATCA) brings us more global bank transparency, and aims to discourage offshore tax evasion. FATCA brings with it large civil penalties and possible criminal sanctions, thus enticing taxpayers to be more forthcoming in reporting their non-US income and assets.

U.S. persons holding any financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country are required to report the account to the US government if the value of the account(s) exceed(s) $10,000. This is done on a Report of Foreign Bank and Financial Accounts (FBAR, now 114). Since 2003 the IRS has had the task of enforcing the required FBAR (114) filing and assessing the harsh penalties for non-compliance. Currently penalties are $10,000 per account that goes unreported, and $100,000 or 50% of the account’s value for willfull failures to report.

Form 8938, Statement of Specified Foreign Financial Assets, may also be required to report foreign accounts and assets such as:

• Financial accounts maintained at foreign financial institutions
• Foreign retirement accounts
• Direct ownership of stock in a foreign corporation (outside of a financial institution)
• Foreign life insurance products
• Foreign partnership interests, such as foreign hedge funds and foreign private equity funds
• Foreign deferred compensation arrangements
• Beneficial interests in foreign trusts or estates

The reporting requirement for Form 8938 has various thresholds with a minimum reporting threshold of $50,000. Similar to the FBAR (114), there are significant penalties for failure to file Form 8938.

Every year, careful consideration needs to be made to determine if foreign reporting requirements affect you. Please keep these factors in mind throughout the year in order to be fully compliant once tax reporting time is upon us.