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Tax planning isn’t just for the end of the year. For optometry practice owners looking to make the most of their financial strategy, advanced moves like capital loss harvesting, inventory management, and strategic contributions can provide ongoing benefits throughout the year. In this post, we’ll explore how to incorporate these powerful tools into your regular tax planning to maximize savings and maintain a healthy bottom line.

Capital Loss Harvesting: Turn Losses Into Gains

Capital loss harvesting isn’t limited to the end of the year. It’s a strategy that can be employed at any time to offset capital gains or even ordinary income.

For example, if you notice that certain investments—stocks, mutual funds, or even cryptocurrency—aren’t performing as expected, selling them can generate a capital loss that reduces your tax liability.

If your losses exceed your capital gains, you can deduct up to $3,000 of the losses against your ordinary income.

Additionally, any unused losses can be carried forward to future tax years, ensuring no opportunity is wasted. To effectively use this strategy, monitor your portfolio regularly and keep an eye on IRS rules, such as the 'wash sale' rule, which requires waiting 31 days before repurchasing the same asset.

Inventory Management: Stay Ahead of the Game

Effective inventory management isn’t just about what you purchase—it’s about ensuring your inventory aligns with your financial and business goals year-round. For optometry practices that hold inventory, such as eyeglass frames, regular reviews can help identify opportunities to optimize stock levels. Buying necessary supplies in advance can help reduce taxable income, but overstocking can tie up cash flow.

If your optometry practice qualifies as a 'small business' under IRS guidelines, you might also be eligible to deduct inventory costs as expenses rather than capitalizing them. This ongoing approach to inventory management keeps your finances flexible and your tax filings efficient.

P.S. Not sure what the magic number is for your store? We can help! Schedule an appointment with one of our experienced consultants who have worked across multiple practices to find the right stock levels for your business. Let’s make sure your inventory strategy works for you.

Retirement Contributions and Financial Planning

Contributing to retirement accounts isn’t just a smart move at tax time—it’s a foundational part of year-round financial planning. Whether you have a 401(k), SIMPLE IRA, or traditional IRA, making regular contributions throughout the year ensures you’re consistently reducing taxable income while building a secure future. For 2025, the 401(k) contribution limit is $23,000, with an additional $7,500 catch-up contribution if you’re 50 or older.

Additionally, consider other ways to smooth out expenses and deductions throughout the year. For example, planning employee bonuses, pre-paying certain expenses, or setting up regular contributions to Health Savings Accounts (HSAs) can all contribute to a well-balanced tax strategy.

Conclusion

Advanced tax strategies like capital loss harvesting, inventory management, and retirement contributions offer year-round opportunities to strengthen your practice’s financial health. By making these tools a regular part of your tax planning, you can maintain flexibility, reduce your tax burden, and keep your practice on a solid financial foundation. In the next and final post, we’ll explore how potential tax policy changes could impact your practice and how to stay ahead. Stay tuned!

For more advanced tax moves, start by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Ryan Poirier

Certified Public Accountant
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As an optometry practice owner, your financial decisions can have a significant impact on your bottom line. One area where you can make smart moves is by employing family members and taking advantage of available tax credits. These strategies not only reduce your tax liability but also provide opportunities to reinvest in your practice and support your loved ones.

Employing Family Members: A Win-Win Strategy

One of the most overlooked tax-saving strategies is employing your family members in your optometry practice. Under current tax laws, you can pay your children or other family members a reasonable wage for legitimate work they perform. This reduces your practice’s taxable income while also shifting income to family members who may be in lower tax brackets.

For example, you could hire your child to assist with tasks like filing, cleaning, or even managing your practice’s social media presence. As long as the wages are reasonable and the work is documented, the payments are deductible as a business expense. Plus, your child can use their standard deduction to avoid paying taxes on the income.

If you pay your child less than $15,000 in 2025, they are not required to file a tax return.

However, if you choose to file one, the income is considered 'earned income,' which makes them eligible to contribute to a Roth IRA. This is where the real power of this strategy comes into play. By contributing the maximum $7,000 annually to a Roth IRA for the next 10 years, your child’s retirement account can benefit from decades of compound growth.

Assuming an average annual growth rate of 7%, those contributions alone could grow to approximately **$1,549,635** by the time your child retires in 50 years. This sets them up for long-term financial independence while also teaching them valuable lessons about saving and investing.

Leveraging Tax Credits: Free Money for Your Practice

Tax credits are one of the most effective ways to reduce your tax liability because they directly reduce the amount of tax you owe, dollar for dollar. Here are two credits that can make a big difference for your optometry practice:

  • Work Opportunity Tax Credit (WOTC): This credit rewards businesses that hire individuals from certain target groups, such as veterans or long-term unemployed individuals. You can receive up to $9,600 per eligible employee, depending on the group.
  • Disabled Access Credit: If you make your optometry practice more accessible to individuals with disabilities, you may qualify for this credit. For instance, installing ramps or modifying restrooms could make you eligible for up to $5,000 in tax credits.

Combining Strategies for Maximum Impact

By employing family members and taking advantage of tax credits, you can create a comprehensive tax strategy that benefits your practice and your family.

For example, you could hire a family member to oversee accessibility improvements in your office, making your practice eligible for both the wage deduction and the Disabled Access Credit.

Conclusion

Employing family members and leveraging tax credits are practical ways to reduce your tax burden while investing in your optometry practice and your loved ones. These strategies require careful documentation and planning, but the rewards are well worth the effort. In the next post, we’ll explore advanced tax moves, including capital loss strategies and inventory deductions, to help you save even more. Stay tuned!

Maximize your tax savings by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Ryan Poirier

Certified Public Accountant
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Taxes fund everything, but when you run a practice, understanding how to minimize them legally and effectively is crucial. Two often-overlooked strategies—the Augusta Rule and the Home Office Deduction—offer unique opportunities to reduce your tax burden while leveraging your existing assets.

The Augusta Rule: Turn Your Home Into a Business Asset

The Augusta Rule (Section 280A(g) of the tax code) allows you to rent your home for up to 14 days per year, tax-free. For practice owners, this is an excellent way to reduce your taxable income while keeping more for yourself.

For example, you could rent your home to your practice for management or board meetings at a reasonable market rate. If you charge $1,000 per meeting and host 14 meetings a year, that’s $14,000 in tax-free income for you while providing a tax deduction for your practice. Documentation is essential: keep invoices, ensure the rate matches local meeting space costs, and record the purpose of each meeting.

The Home Office Deduction: Deduct a Portion of Your Home Expenses

If you use a dedicated space in your home exclusively for business purposes, you may qualify for the home office deduction (Section 280A(c)). This allows you to deduct a portion of your home expenses, including utilities, internet, property taxes, and more, proportional to your office size.

Additionally, a home office turns your commute into a business expense. Instead of non-deductible personal mileage, trips between your home office and practice become tax-deductible. With proper documentation of your office space and expenses, this strategy can save you thousands each year.

Maximize Savings by Combining These Strategies

By using the Augusta Rule and the home office deduction together, you can maximize your savings. For example, host quarterly meetings at your home while using a designated office space for administrative tasks. Together, these strategies can significantly reduce your tax bill.

Conclusion

These strategies exemplify how proactive tax planning can create meaningful savings for your practice. Talk to your CPA about how you can implement these tools to benefit your bottom line. Next up, we’ll explore how employing family members and leveraging additional tax credits can offer even more opportunities for savings. Stay tuned!

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Master your tax savings by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Ryan Poirier

Certified Public Accountant
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"Taxes are what fund everything." That’s a direct quote I often share when discussing the importance of understanding Title 26—the tax code. It’s what keeps our country running. For optometrists, mastering the tax code isn’t just about compliance; it’s about making your practice more efficient and profitable.

In this post, I’ll walk you through some foundational tax strategies that are highly beneficial for practice owners. From leveraging key deductions to planning proactively, these steps can significantly impact your bottom line.

Why Tax Planning Matters for Optometrists

Tax planning isn’t just something you do in April—it’s a year-round activity. As a practice owner, you’re responsible for both your patients and your business, and taxes are one of the biggest expenses you’ll manage. Getting your tax strategy right means you’ll keep more of what you earn, giving you the flexibility to invest in your team, equipment, or even yourself.

Let’s talk about why this matters. Title 26 of the U.S. Code—our tax law—is one of the most important pieces of legislation because it funds everything. Without it, there’s no Homeland Security, no Department of Justice, no Health and Human Services. As small business owners, you’re directly contributing to this system, but the good news is that the code also provides opportunities to reduce your tax burden if you understand how to use it.

Key Tax Deductions for Practice Owners

The tax code is designed to encourage investments in your business, and there are several provisions you can take advantage of as an optometrist.

  1. Bonus Depreciation:
    This one’s big. With bonus depreciation, you can deduct the bulk (60% in 2024) of the cost of equipment—new or used—in the year you purchase it. That means whether you’re buying diagnostic tools or office furniture, you can immediately write off most of the expense instead of spreading it over several years. This deduction was a game changer for many of our clients back in 2018 when it came into play under the Tax Cuts and Jobs Act.
  2. Qualified Business Income Deduction (QBI):
    This deduction allows a 20% reduction on your pass-through income. Let’s say you make $100,000 in pass-through income from your practice. Before 2018, you’d pay taxes on the full $100,000. With the QBI deduction, you’re only taxed on $80,000. That’s a significant savings for practice owners operating as S Corporations or Partnerships.
  3. Standard Deduction Changes:
    The Tax Cuts and Jobs Act also nearly doubled the standard deduction, which has simplified things for many taxpayers. For example, the standard deduction for single filers is now $14,600, and for married couples, it’s $29,200. This change means fewer people need to itemize deductions, but it also requires careful planning to maximize your tax benefits.

The Role of Proactive Planning

Here’s the thing: waiting until tax season is too late. Tax planning is about looking ahead and making decisions now that will benefit you later.

  • Track Everything: Keep detailed financial records throughout the year. It makes life easier for you and your CPA.
  • Talk to Your Tax Pro: Schedule regular check-ins with your tax advisor to ensure you’re staying on top of opportunities.
  • Plan Ahead: Whether it’s buying equipment, contributing to a retirement account, or considering a home office deduction, proactive planning can save you thousands of dollars.

Conclusion

At the end of the day, tax planning is about making sure your hard work pays off—literally. By understanding and leveraging foundational strategies like bonus depreciation, the QBI deduction, and proactive planning, you can ensure you’re keeping more of your money to invest back into your practice.

Taxes don’t have to be overwhelming. With the right strategies and a solid understanding of the law, you can take control of your financial future. In the next post, we’ll explore more advanced strategies like the Augusta Rule and home office deductions—two areas where practice owners can find significant savings. Stay tuned!

Master your tax planning by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Ryan Poirier

Certified Public Accountant
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In the complex world of tax planning, finding ways to optimize your financial situation can be a game-changer. For optometrists working in clinics, one powerful strategy to consider is salary reduction. While it may seem counterintuitive to voluntarily reduce your income, there are several compelling benefits to doing so. In this blog post, we'll delve into the advantages of opting for a salary reduction in a clinic setting and explore how it can positively impact your overall financial health.

  1. Reduce Social Security and Medicare Tax

For many optometrists, a significant portion of their income is subjected to Social Security and Medicare taxes. These payroll taxes can take a sizable bite out of your earnings. However, by choosing to take a lower salary, you can reduce the amount of income subject to these taxes. This means that not only will you keep more of your hard-earned money, but you'll also see a reduction in your tax liability.

  1. Increase Qualified Business Income (QBI)

One of the most compelling reasons to consider a salary reduction is the potential increase in Qualified Business Income (QBI). QBI is a key factor in determining the deduction you can claim on your tax return, thanks to the Qualified Business Income Deduction (QBI Deduction), which was introduced with the Tax Cuts and Jobs Act.

By lowering your salary, you can increase the portion of your income classified as QBI, which, in turn, can lead to a larger deduction on your tax return. 

  1. Simplify Tax Payments

Quarterly estimate payments can be a headache for many optometrists. Keeping track of when and how much to pay can be a daunting task. However, with a salary reduction strategy in place, you may find that you can increase your federal and state (if applicable) withholdings. This means that more taxes are withheld from your paychecks throughout the year, reducing or even eliminating the need for quarterly estimate payments.

This shift towards a recurring payment of taxes can provide financial stability and peace of mind. Instead of scrambling to make four large payments throughout the year, you can budget more effectively with consistent, smaller withholdings.

  1. Recurring Owner Distributions

Now, you might be wondering how to manage your finances with a reduced take-home pay. The answer lies in the strategic use of recurring owner distributions. These distributions are generally non-taxable and can be used to replace the reduced income from your salary. By carefully planning these distributions, you can ensure that your living expenses are covered, all while reaping the tax benefits mentioned earlier.

In essence, opting for a salary reduction doesn't mean a reduction in your overall income; it means a smarter distribution of your earnings, allowing you to maximize tax benefits and simplify your financial life.

As an optometrist working in a practice, the benefits of taking a salary reduction can be substantial. From reducing your tax liability through QBI optimization to simplifying your tax payments and ensuring a steady flow of income through owner distributions, this strategy can significantly enhance your financial well-being. It's essential to work closely with a qualified tax advisor or financial planner to implement these strategies effectively and in compliance with tax laws. By doing so, you can make the most of your clinic ownership and enjoy the financial rewards that come with it.

Maximize your benefits by scheduling a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Archie Keebler

Tax Manager
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Tax laws can be complex, but understanding the nuances can make a significant difference in your financial strategy. One such provision that can benefit homeowners is Section 280A(g), commonly known as the Augusta Rule. This rule provides an opportunity for individuals to exclude rental income if their property is rented out for less than 15 days in a year. In this blog post, we'll delve into the details of the Augusta Rule, explore its requirements, and offer some practical recommendations for homeowners looking to take advantage of this provision.

Section 280A(g) in a Nutshell: 

The Augusta Rule, outlined in Section 280A(g) of the Internal Revenue Code, offers homeowners the ability to exclude rental income from their taxable earnings under specific conditions. Here are the key details:

  1. Primary Use Must Be Personal: To qualify for the Augusta Rule, the property's primary use must be personal. This includes primary residences, secondary homes, and vacation homes. In other words, it's not applicable to properties used exclusively for rental purposes.
  2. Expenses Are Not Deductible: While you can exclude rental income, it's important to note that expenses related to these rentals are not deductible. This means you won't be able to deduct costs like maintenance, repairs, or utilities for the period the property is rented under the Augusta Rule.
  3. Non-Consecutive 14 Days: The 14 rental days do not need to be consecutive. This flexibility allows homeowners to take advantage of sporadic rental opportunities without losing the tax benefits provided by the rule.
  4. Reasonable Rental Price: The rental price must be reasonable. While this might seem subjective, it's crucial to ensure that the rent charged is consistent with market rates. 

Tax Planning Opportunity for Business Owners:

Have you ever explored the option of utilizing your home for corporate meetings or office parties? If so, you could potentially leverage the Augusta Rule, allowing your business to compensate you for the business use of your home. As noted earlier, this income can be excluded on a personal level.

Practical Recommendations:

If you're considering utilizing the Augusta Rule to exclude rental income, here are some practical recommendations:

  1. Market Research: Before setting a rental price, conduct thorough research to determine what constitutes a reasonable cost in your area. Check prices for similar properties on rental websites, inquire about rates for hotel conference rooms, and explore other potential sources to establish a competitive rental price.
  2. Document Everything: Keep meticulous records of your rental arrangements. Document the pricing agreed upon, the formal agreement to rent the residence, and minutes of any meetings or discussions related to the rental. These records will be crucial in case of any inquiries or audits.
  3. Involve Relevant Parties: If multiple individuals are involved in making decisions related to the business, be sure to include them in any meetings at the residence. This transparency ensures that all stakeholders are aware of and agree to the rental arrangements.

The Augusta Rule, found in Section 280A(g), provides a valuable opportunity for homeowners to exclude rental income from their taxable earnings when certain conditions are met. By understanding the rule's requirements and following practical recommendations, homeowners can navigate the complexities of tax law and make the most of this tax-saving provision. Always consult with a tax professional or advisor to ensure you are taking full advantage of available tax benefits while staying in compliance with tax regulations. 

Get help understsanding the Agusta rule by scheduleing a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Archie Keebler

Tax Manager

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As a business owner or self-employed individual, one of the many financial aspects you need to consider is how to calculate deductible expenses related to your vehicle. The IRS provides two primary methods for calculating these expenses: the Standard Mileage method and the Actual Expenses method. Understanding the nuances of each method and when to use them can have a significant impact on your tax liability. In this blog post, we'll break down these two methods and explore some key considerations to help you make informed decisions about deductible expenses. 

Method 1: Standard Mileage Method 

The Standard Mileage method is the go-to choice for individuals who own their vehicles and use them for business purposes. The calculation is straightforward: 

Multiply business miles by the IRS standard mileage rate. 

This rate is determined by the IRS and varies year to year. For example, in 2023, the standard mileage rate is 65.5 cents per mile for business use. 

One notable advantage of this method is that if your business reimburses you for these miles, the reimbursement is deductible by the business and is not taxable income for you.  

Overall, this is the simplest method for taxpayers with the least amount of documentation required. 

Method 2: Actual Expenses Method 

The Actual Expenses method comes into play when your business owns the vehicle. This method involves a more detailed and comprehensive approach to calculating deductible expenses: 

  1. Keep a log of all miles driven. 
  2. Determine your business use percentage by dividing business miles by the total miles driven for the year. 

If your business use percentage is less than 50%, this method may not be the most advantageous for you. It's crucial to assess your specific situation before committing to this approach. 

Within the Actual Expenses method, there are two sub-methods to figure deductible costs: 

  • Income Inclusion Method: Deduct all vehicle-related costs and add personal miles to compensation on the individual's W-2 form. This means that personal use of the vehicle is included in your taxable income. 
  • Expense Exclusion Method: Reduce actual costs by personal miles. Under this method, personal use of the vehicle does not result in additional income on your W-2 form. 

Key Considerations 

  1. Business Miles Definition: Business miles include trips to meet patients, traveling between business locations, trips for banking or shopping for business purposes, attending business meetings, continuing education trips and transporting equipment. Commuting from home to your business location and back is not considered business mileage. 
  2. Vehicle Weight Matters: Vehicles between 6,000 and 14,000 pounds can be fully depreciated, potentially providing significant tax benefits. For vehicles under 6,000 pounds, depreciation is capped, with a limit of $20,200 in 2023. 

Calculating deductible expenses related to your vehicle can be a complex task, but it's a crucial aspect of managing your finances as a business owner or self-employed individual. Understanding the Standard Mileage and Actual Expenses methods, as well as their associated sub-methods and considerations, can help you make informed decisions that maximize your tax deductions while staying compliant with IRS regulations. It's advisable to consult with a tax professional or accountant to ensure you're following the most advantageous approach for your unique situation, ultimately helping you keep more of your hard-earned money. 

To get help with calculating expenses, schedule a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Patrick McReynolds

Operations Manager

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As an optometrist running your own clinic, you're likely familiar with the many demands of your profession. Amidst the clinical work and patient care, you may not have considered the potential tax benefits that come with your home office. The home office deduction can be a significant advantage for optometrists who operate their own clinics from home. In this article, we'll explore the unique requirements and deductions associated with the home office deduction, tailored specifically to optometrists. 

Requirements for a Home Office Deduction 

To claim the home office deduction, you must meet certain requirements set by the IRS. Here's what you need to know: 

  1. Principal Place of Business: Your home office can qualify as the principal place of business if a substantial amount of administrative and/or management activities are performed there. This means that if you primarily use your home office for tasks like managing your business, review patient records, employee hours, review resumes for hiring or other necessary business functions then it can meet this criterion. 
  2. Exclusive Business Use: The office or area you're claiming as your home office must be used exclusively for business purposes. It can include storage of inventory, supplies or equipment related to your business. Any personal use of this space may disqualify you from claiming the deduction. 

Calculating Your Deduction 

Once you've met the requirements, it's time to calculate your home office deduction. There are two methods to determine the business percentage: 

  1. Square Footage Method: Divide the square footage of your home office by the total square footage of your entire home. 
  2. Rooms Method: Divide the number of rooms used exclusively for your business by the total number of rooms in your home. Generally, Williams Group includes kitchens, living rooms and dining rooms and do not include bathrooms. 

Expenses for Deduction 

Understanding which expenses are deductible is important to maximizing your tax benefits: 

  1. Direct Expenses: Expenses directly related to the office area, such as repairs or painting in the office, are fully deductible. These costs are tied directly to your business space and can be claimed in full. 
  2. Indirect Expenses: Indirect expenses are those related to the entire home, such as insurance, utilities, and general repairs like furnace maintenance. These costs are based on the business use percentage you calculated earlier. For example, if your home office accounts for 10% of your home's total square footage, you can deduct 10% of these indirect expenses. 
  3. Unrelated Expenses: Expenses not connected to your home office, like lawn care or repairs in other areas of your home, are not deductible under the home office deduction. 

A Note on Depreciation  

One important consideration is the depreciation of your home if you've been claiming the home office deduction. If you eventually sell your residence after taking depreciation for the home office, the depreciation will reduce the cost basis of the residence when calculating the excluded gain of your primary residence. Be sure to consult with a tax professional to fully understand the implications of depreciation on your tax situation. 

The home office deduction can be a valuable tax benefit for self-employed individuals. By meeting the necessary requirements and understanding how to calculate your deductions, you can potentially reduce your tax liability. However, tax laws can be complex, so it's always a good idea to consult with a tax professional or accountant to ensure you're making the most of this deduction while staying compliant with IRS regulations. 

Maximize your deductions by schedule a call with Brad Rourke, CPA, ABV or learn more about optometry-specific accounting and tax on our website.  

Archie Keebler

Tax Manager

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