IRS Information Useful in Planning for Your Dental Practice

As part of the work done by the dental attorneys at Nardone Limited for various buy-sells, we recognize that it is important for dentists to make informed decisions regarding the location in which they choose to practice. The Internal Revenue Service recently issued household income tax statistics categorized based upon zip code, and further broken down by each household’s adjusted gross income (“AGI”). These statistics, which provide a detailed glance into the socioeconomic statuses of taxpayers in specified areas of the U.S., are powerful tools in the hands of a dentist. Broken down and grouped based upon each household’s AGI, the statistics provided include details such as: (i) number of dependents; (ii) number of returns filed per zip code; (iii) number of taxable individual retirement arrangement distributions; (iv) number of exemptions; and (v) number of returns filed with ordinary dividends. Each category, such as number of dependents, is further sub-grouped based upon each household’s AGI.

For example, the most recent IRS’ statistics indicate that there were 4,479 households in Hilliard, Ohio that made between $100,000 and $200,000. Of those 4,479 household returns, 3,825 were filed jointly, and 5,712 dependents were claimed. That is, 85{c91082aefe0e580fe546c40af534787b48cfd474f8c9ab8dac50bf49a7a1c43a} of the returns were filed by married couples, with an average of 1.5 children per return. From a business perspective, this demographic information is extremely powerful. For example, if a dentist was researching various counties in Ohio in search of an ideal location to open a pediatric dentistry practice, then Hilliard, Ohio would be a great option.

Because of the manner in which the statistics are categorized, dentists are able to determine not only the number of dependents claimed in relation to the number of returns filed, but also the potential disposable income of each subgroup. Please see the below excerpt from the IRS regarding Hilliard, Ohio.

AGI

Number of Returns

Number of Joint Returns

Number of Dependents

Taxable Individual Retirement Arrangement Distributions

Pensions and Annuities in AGI

$1 – $25,000

8,621

822

3,072

455 at $2,601

893 at $7,376

$25,000 – $50,000

86,243

1,312

3,675

456 at $4,148

962 at $17,139

$50,000 – $75,000

4,461

1,858

3,269

387 at $4,785

827 at $19,874

$75,000 to $100,000

3,393

2,281

3,271

340 at $5,672

623 at $16,434

$100,000 – $200,000

4,479

3,825

5,712

431 at $9,015

877 at $26,323

$200,000 or more

767

669

1,065

115 at $4,919

158 at $9,082

As detailed above, the statistics on the IRS’ website are broken down by each household’s AGI for each county in the United States. The above details, as well as several more factors, are available for review by clicking here. Because of the myriad uses for the above data, particularly as it relates to and may effect new and ongoing dental practices, Nardone Limited recommends that all dentists and participants review the statistics in relation to the location of their dental practices.