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Your 2023 Year-End Tax Playbook (Dentist Edition)

Picture of Four Quadrants Advisory Four Quadrants Advisory Updated on July 23, 2026

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Your 2023 Year-End Tax Playbook (Dentist Edition)

The end of the year is here, and that means one thing—tax decisions that can either save you money or come back to bite you. In this episode, Jarrod teams up with CPA and JD Steve Levy to break down everything practice owners should be thinking about as December wraps up: bonuses, holiday parties, meals deductions, write-offs, and the IRS changes heading your way in 2024.

Steve brings clarity, Jarrod brings jokes, and together they make taxes feel (almost) fun. Whether you're handing out gift cards, planning the office party of the decade, or trying to understand what the IRS just changed again, this episode gives you the straightforward, proactive guidance every dentist needs before the year ends. Let’s make tax season a whole lot less painful.

Announcer:
Hello, everyone. Welcome to The Millionaire Dentist podcast brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry, finances, and business practices to help you become the Millionaire Dentist you deserve to be. Please be advised we do speak with an honest tongue and may not be safe for work.

Jarrod Bridgeman:
Hello and welcome to another episode of The Millionaire Dentist. I'm your host, Jarrod Bridgeman. Casey Hiers is out at the moment. He is working with some clients at the moment, so I brought in Steve Levy. Pipes, the man with the golden voice. Steve, how are you?

Steve Levy:
Hey, Jarrod. How are you doing?

Jarrod Bridgeman:
I'm doing great. Steve, I bring you in at the end of every year for something we call the year-end tax wrap-up. These are things that practice owners, and business owners in general, should probably keep in mind as the year winds down.

Steve Levy:
Yeah. Absolutely.

Jarrod Bridgeman:
Let me ask you, a lot of practice owners and stuff will give out holiday bonuses to their employees. Can you walk me through what needs to be done with that?

Steve Levy:
Yeah. This is about the time when you see practice owners paying out bonuses. You can't just give it to them, and that's the end of the story, because the relationship between you as the owner and your employee is an employer-employee relationship. Any payment that you give them really is compensation.

Jarrod Bridgeman:
This would include non-cash payments or whatever as well?

Steve Levy:
Absolutely.

Jarrod Bridgeman:
A gift of some sort or-

Steve Levy:
Yeah. Gift cards typically. What we recommend one of two things, but they both should be considered for it. You can obviously just give them a bonus through their regular payroll system. Not something we commonly see as far as bonuses, because gift cards or cash is typically what we see. In that second instance, what we recommend is that you give them the money. No problem. Then report the people that received that money or gifts... Report that to your payroll provider so that they can do what's called grossing up for taxes, which means that the net amount they receive is still the same. They still receive that amount, but there are social security and Medicare taxes on that amount. Essentially, it brings that amount higher as far as reported in their compensation to reflect that you're covering their social security and Medicare withholding.

Jarrod Bridgeman:
Is there a minimum where that would take effect, or is it any and all?

Steve Levy:
It's really any and all. There's no... Because, like I said, it is considered compensation no matter what amount. There's really not a thing called gift to your employee because of that relationship. That it's for, typically services given at the time or even prior.

Jarrod Bridgeman:
You said it's not as often that you see them just do a monetary bonus through the payroll system.

Steve Levy:
Yeah.

Jarrod Bridgeman:
Between those two options you've shown, is there an easier or less complicated path?

Steve Levy:
Yeah. Certainly, the first option just saying, "Hey, here's whatever amount," like $1,000 bonus. It's compensation, so it's going to have withholding.

Jarrod Bridgeman:
And it's already automatically taken care of?

Steve Levy:
Yeah, it's already taken care of. The other one... With the second option of just giving the money or gifts, the best suggestion there is to let your payroll provider know as ahead of time as possible so that they can not cram to get that in. Especially since it's usually given at the end of the year, and that has to be reported on the W-2 and everything.

Jarrod Bridgeman:
If it's done through payroll like that, would it be taxed as a bonus then, too, with the slightly higher rates?

Steve Levy:
Yeah. Most likely.

Jarrod Bridgeman:
Okay. Steve, keeping in with the holiday theme. A lot of companies are gearing up to within the next couple of weeks do a holiday party.

Steve Levy:
Absolutely.

Jarrod Bridgeman:
I know ours is in week and a half.

Steve Levy:
That's right.

Jarrod Bridgeman:
I'm pretty stoked about that.

Steve Levy:
Absolutely.

Jarrod Bridgeman:
Can't wait to make our owner or buy me all kinds of nice food and drinks. But Steve, how does the holiday party work with taxes? I'm assuming... Walk me through that? You know the right words.

Steve Levy:
It's the exception to a lot of rules in what you can actually write off for meals and entertainment. When you have a holiday party, the normal rule is you can't write off entertainment, and you only get 50% of what you write off for meals. Well, this is a different situation. It's a holiday party. It gets 100% write-offs for both. You don't just have to have it during this time, it's [inaudible 00:05:10]-

Jarrod Bridgeman:
Entertainment and food?

Steve Levy:
Right.

Jarrod Bridgeman:
We can have the Rockettes show up?

Steve Levy:
Whatever. That would be fantastic.

Jarrod Bridgeman:
I'm into that.

Steve Levy:
I heard that's actually happening, but that would be really great. But anyway, and it's not just restricted to holiday parties. It can be company parties or summer parties, or that thing. Now, we can't go crazy-

Jarrod Bridgeman:
Just a standard dinner with your department?

Steve Levy:
No, not that. It's got to be a company-wide occasion.

Jarrod Bridgeman:
Got it. Okay.

Steve Levy:
Which can be really at any time, but holiday is usually what we see around that time. But it's the exception to a lot of rules, which actually we'll get into as the next topic. But go crazy, you'll get 100% right off.

Jarrod Bridgeman:
All right. Next step would be you had mentioned that outside of the company-wide holiday parties and 100% tax write-off with those, there is you said usually like a 50% thing with just meals in general.

Steve Levy:
Right.

Jarrod Bridgeman:
You said, the notes you wrote me so I know what to ask, that there was a deduction change for 2023 with the meals?

Steve Levy:
That's right.

Jarrod Bridgeman:
Okay.

Steve Levy:
It had been for several years now since the Tax Cuts and Jobs Act, that specifically for purchases from restaurants that you got to write off 100% of the meals that you purchased from restaurants. Take out, in person, whatever. Not groceries. That wasn't part of it. But starting in 2023, that's reverted back to just the 50% write-off rule.

Jarrod Bridgeman:
Which obviously not great, but it's still something.

Steve Levy:
Yeah. Absolutely. It's still available. Like I said, the holiday party is an exception for that, but-

Jarrod Bridgeman:
We are a proactive firm here, and so when that changed, I know we probably reached out to our clients and let them know. But is there anybody you think out there that's going to get caught not knowing about that?

Steve Levy:
I would say because it's been the rule for a few years now, since that act around 2018. It's a change-

Jarrod Bridgeman:
It's one of those things where you probably shouldn't have placed your bets on. Being like, "Well, I'm going to get 100% of this back," so you did a dinner every week.

Steve Levy:
Yeah. Definitely. But if you're having a large meal expense, typically you'll get that 50% haircut. A lot of states were doing it too. They were like, "Sure, federal law. But we like the old way, so we're only going to give you 50%." You had to make an annoying adjustment for state to do that. But now everybody's in sync, federal and state, and back to the old ways.

Jarrod Bridgeman:
Okay. Does that make it easier on your end when you're doing people's taxes?

Steve Levy:
It's fine either way. We know what to put where and what's a meal expense.

Jarrod Bridgeman:
That's good because I don't. That's why I appreciate your expertise when you come in here and whenever I guilt you into doing my taxes next time. That'd be nice. With 2024 coming up, you and I had sat down and talked about the IRS and retirement changes and things like that. Do you mind going through just a quick cover of the inflationary changes for 2024?

Steve Levy:
Yeah. No problem. Like we talked about, it wasn't a boost as much as from '22 to '23 as far as limits that you can defer for 401(k), but still some things did increase. In 2023 you could defer for 401(k) purposes 22,500 for your 401(k). 2024, it's just a $500 boost up to 23,000 versus '22 was around 20,000. It went up, but not as much.

Jarrod Bridgeman:
One of these changes, let me ask you real quick, with my 401(k). I went into the computer, and I started diverting all your funds into mine. Is that fine?

Steve Levy:
Okay. That would be very creative.

Jarrod Bridgeman:
I really need to catch up.

Steve Levy:
It sounds like an office space type of deal where it-

Jarrod Bridgeman:
It's just a quarter of a penny. It's fine.

Steve Levy:
diversion. It's just incremental. Now, the catch-up contributions, which I'm catching up. You're catching up to take my money.

Jarrod Bridgeman:
This is after 55?

Steve Levy:
That's right.

Jarrod Bridgeman:
Yeah. You need to catch up now.

Steve Levy:
No, 50.

Jarrod Bridgeman:
50, my bad. 50, yes.

Steve Levy:
That remained the same. That's still 7,500, and those are the two main ones. There's also, like we mentioned last time, a boost in how much compensation can be considered for the company match. It was 330,000 in 2023. In 2024, it boosted up to 345,000.

Jarrod Bridgeman:
If you need more information about this, listeners, there is an episode where Steve and I dive really into the nitty-gritty of that just a couple of weeks ago. Let me ask you, you have written down here, "Federal brackets," so those have shifted a bit?

Steve Levy:
They have. It was a big boost from 2022 to 2023, and the change really was that more income was taxed at lower rates. Really, that means an overall tax hit was less. That's why there was a bigger boost from '22 to '23. There still is a boost from '23 to '24, which just came out in November. For example, the jump of the limit of the taxable income for the 24% bracket. That jumped $20,000. 20,000 more is at the 24% bracket versus the 32% bracket, so it was 24,000 between '22 and '23. It did go down. But that difference between the 32 and 24%, that's a big rate difference. It's one of the bigger ones in the whole bracket system. There was also a jump in what's in the 32% bracket versus 35%. That increased 25% versus 30,000. All this means is really more income taxed at a lower rate. If you had the same income in one year versus the next, the next one would be less. The tax would be less.

Jarrod Bridgeman:
That would be starting next year, like January 1st?

Steve Levy:
That's right.

Jarrod Bridgeman:
It's December. This is the time of year where a lot of owners out there will be like, "Oh, shoot. I should probably make some end-of-year purchases here real quick. Let's get some stuff in here," and sometimes try to use that tax code. What's that tax code?

Steve Levy:
It's Section 179.

Jarrod Bridgeman:
Section 179, which if you need the equipment, is very beneficial for something you actually need to use.

Steve Levy:
Sure.

Jarrod Bridgeman:
But a lot of people will try to use this as a way to lower their taxes.

Steve Levy:
Right.

Jarrod Bridgeman:
Can you walk me through end-of-year purchases?

Steve Levy:
Yeah. What we generally believe is that you shouldn't make expenses and purchases just to save taxes because that's kind of chasing things. You lose the money from the amount that you're spending for it. Now, if you need it, by all means go for it before the end of the year. It's not-

Jarrod Bridgeman:
If you actually need it, sit down and think about it.

Steve Levy:
Yeah. A business decision versus just, "I just want to minimize my tax. Just not pay the government anything."

Jarrod Bridgeman:
I saw a video the other day on TikTok. This intern. They gave the intern a company card, and he spent $18,000 on a bag. A Birkin bag, I think.

Steve Levy:
Okay.

Jarrod Bridgeman:
But yeah, so I wouldn't do that.

Steve Levy:
Yeah. That's rough. Now, one rule you have to make sure you follow is that you're not going to get the benefit in 2023 unless you place it in service by the end of the year. That's really the [inaudible 00:13:36]-

Jarrod Bridgeman:
Even if you paid for it in 2023, if you haven't used it yet, it doesn't count?

Steve Levy:
Right. Exactly.

Jarrod Bridgeman:
If January 4th, you finally put it into motion. It would go in 2024?

Steve Levy:
That's right. Which you wouldn't get that savings. The time value of money savings.

Jarrod Bridgeman:
It'd be another year.

Steve Levy:
It would. If you're going to buy that equipment, make sure you're getting it delivered and in some way are you using it.

Jarrod Bridgeman:
Steve, as always, you come in here, and you just kill it. Is there anything else you would like to add before we wrap up the tax wrap-up?

Steve Levy:
Well, just think about the various topics we talked about. Especially the bonuses one. We often see that one where people believe, "Hey, here's the money. We're good, right?" No, there's some reporting there. By all means, throw the big holiday party. Do all the meal expenses you want. But just note the less deduction and don't fall for all the end-of-year purchase sales pitches for that, because make sure you need that.

Jarrod Bridgeman:
Okay. Thank you, listeners. We really appreciate you tuning in. Please feel free to follow us on Spotify or subscribe to us on Apple Podcasts. If you like our podcast, please leave us a review. It always, always helps. Steve, thank you so much, and have a happy holiday and a good new year.

Steve Levy:
You as well.

Announcer:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information. Thank you to you, the listener, for tuning in. The Millionaire Dentist podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, go on over to fourquadrantsadvisory.com and see why, year after year, they retain over 95% of their clients. Thank you again for joining us, and we'll see you next time.