Maximize Tax Savings by Employing Your Children in Dentistry

Running a dental practice often means juggling everything from patient care to payroll. But did you know there’s a smart, legal way to reduce your tax burden while teaching your kids valuable life skills? That’s right—by employing your children in your dental practice, you can unlock real tax savings. Let’s dive into how this works and why so many dentists across the U.S. are embracing this strategy.

Why Hiring Your Kids Makes Financial Sense

First things first—this isn’t a tax loophole or sneaky tactic. It’s a legitimate method supported by the IRS. When you hire your children to work in your dental office, you’re allowing your business to deduct their wages as a business expense. At the same time, those wages are often taxed at a much lower rate—or not at all, depending on the amount and age of the child.

Key Benefits of Employing Your Children

• Tax-deductible wages: Their pay reduces your taxable income.
• Lower payroll taxes: If your business is a sole proprietorship or partnership (with both spouses), you don’t have to pay Social Security and Medicare taxes on your child’s wages until they turn 18.
• Educational opportunity: Your kids learn about responsibility, money management, and the value of work.
• Retirement savings: They can contribute to a Roth IRA with earned income—starting early pays off big in the long run.

What Jobs Can Your Kids Actually Do?

This is a common question, and the answer really depends on their age and maturity. You’re not hiring them to perform procedures, of course. But there are a ton of helpful—and legitimate—tasks children can take on in a dental practice.

• Filing and shredding paperwork
• Cleaning and organizing supply shelves
• Assembling dental hygiene kits
• Running light errands
• Creating simple content for your social media or website

The key is to make sure the work is real, age-appropriate, and clearly documented. And yes, that means doing a bit of paperwork.

Set It Up Right—Or Risk Trouble

The IRS loves details, so make sure you’re treating your child like you would any other employee. That means:

• Keep timesheets to track hours worked
• Pay a reasonable wage based on the work performed
• Keep payroll records and issue a W-2 at the end of the year

Hiring a tax professional or accountant is a good idea here. They can guide you through the process and make sure everything complies with IRS rules.

Real Talk: Is It Worth the Effort?

Absolutely. Let’s say you pay your child $12,000 a year for part-time work. That’s $12K you can deduct from your dental practice income. Your child likely pays little to no tax on this amount. You save on payroll taxes, reduce your taxable income, and your child gets valuable experience and savings for the future.

Final Thoughts

If you’re a dentist looking to maximize tax savings—and involve your children in your business—this is a strategy worth exploring. Not only can you keep more of your hard-earned money, but you’re also teaching your child about hard work and financial literacy.

Have you considered employing your kids in your dental practice? Talk to your CPA to find out how to implement this strategy legally and effectively.

It’s not just smart business—it’s smart parenting, too.