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September 2013


by Andrew D. Schwartz, CPA

Managing a practice requires that you look at "the numbers" on a regular basis.  If you're like most practicing Doctors, you probably try to glance at the production and collections figures at least monthly.  Did you know that there are a lot of other performance metrics that can help you gauge how your practice is performing? 

Figuring out which metrics are meaningful is one challenge.  The problem is that calculating those metrics and then looking at those performance indicators in a vacuum doesn't provide you with much insight at all.  For that reason, calculating various performance metrics will be much more valuable to you if you can compare your practice's metrics to your peer group.

My CPA firm currently provides tax, accounting, payroll, and basic practice management services to more than 130 dental practices.  This past winter, we collected practice management data from many of our practice clients and used that data to calculate the following ten meaningful performance metrics for general dentists for 2012:

  • Number of Active Patients (Defined as an individuals treated at least once during the prior twelve months)
  • Collections per Active Patient
  • Collections per Doctor Hour
  • Collections per Procedure
  • Number of Procedures per Active Patient
  • Number of Non-Diagnostic and Non-Preventive Procedures per Active Patient
  • Re-Care Efficiency (Defined as the percentage of Active Patients who came in for two exams during the year)
  • Number of New Patients brought in during the last year
  • Percent of New Patients to Active Patients
  • Percent of Adjustments and Write-Offs to Gross Production

Please note that even though the data was collected mostly from practices in the Greater Boston area, I feel that most of these metrics are relevant to practices located within all 50 states.

To make these metrics even more meaningful, we calculated each performance metric based on the data collected from all the participating practices, and then re-calculated them based on the practices that collected $1 million dollars or more during 2012.  It's very interesting to see how the performance metrics for the total sample compare with the same metrics calculated from just the million dollar practices.

An part of our analysis, we also created a graph that we call our "Internal Marketing Matrix".  This graph plots Re-Care Efficiency on the x-axis versus New Patient Percentage on the y-axis for each of the participating practices.  Depending on your practice metrics and where you fall on this graph, you'll either be a politician, engineer, neophyte, or "dentist-preneur".  

To learn more about these ten metrics and the four quadrants of our Internal Marketing Matrix, and to find out how your general dental practice compares against the average practice and the "million dollar" practice, please watch this 13-minute recorded PowerPoint Presentation on Million Dollar Metrics for General Dentists, or click below. 


And if you'd like to set up a time for my firm to help you figure out these metrics for your practice, please do not hesitate to e-mail me that request.  We'd really appreciate the opportunity to help you gain some insight on the performance metrics for your practice.



by Richard S. Schwartz CPA. CVA

NOTE:  On August 29th, the IRS Announced that all legal same-sex marriages will be recognized for federal tax purposes.

In June 2013, the US Supreme Court overturned Section 3 of the Defense of Marriage Act (DOMA), which defined a marriage as a union between a man and a woman for federal purposes.  With the historic June 2013 decision, same sex married couples (SSMC’s) have been granted the same federal rights, privileges, and protections as heterosexual married couples as long as they were legally married in states where same sex marriages are recognized. 

However, Section 2 of DOMA was not overturned – leaving the decision to allow same sex marriages to be determined at the state level.  Currently, 13 states recognize same sex marriages: CA, CT, DE, IA, MA, MD, ME, MN, NH, NY, RI, VT, and WA, as well as the District of Columbia.

In addition to numerous benefits such as health insurance, retirement and social security, the new law also extends to federal income taxes.  However, still unresolved at this time is the issue of whether or not the extended rights are retroactive.  Currently, uncertainties exist and guidelines from the IRS and other federal agencies specifying how to handle past years are expected to be forthcoming in the next few months. 

Because of this uncertainty, SSMC’s should consider filing a Protective Claim for Refund via an amended federal tax return (Form 1040X), where SSMC’s would financially benefit by filing a joint tax return, provided they were legally married in one of the states that recognizes same-sex marriages.  A Protective Claim for Refund preserves your right to claim a tax refund that is dependent upon a contingency being resolved.  In this situation, the contingency would be the IRS resolution to past years’ filing status for SSMC’s.  Currently, a taxpayer can go back three years to file an amended tax return, opening the door to amend tax years 2010, 2011, and 2012 (as well as 2009 if you had filed an extension for that year).

According to the IRS on page 14 of their Publication 556:

Protective claim for refund.   If your right to a refund is contingent on future events and may not be determinable until after the time period for filing a claim for refund expires, you can file a protective claim for refund. A protective claim can be either a formal claim or an amended return for credit or refund. Protective claims are often based on current litigation or expected changes in the tax law, other legislation, or regulations. A protective claim preserves your right to claim a refund when the contingency is resolved. A protective claim does not have to state a particular dollar amount or demand an immediate refund. However, to be valid, a protective claim must:

  • Be in writing and be signed,

  • Include your name, address, social security number or individual taxpayer identification number, and other contact information,

  • Identify and describe the contingencies affecting the claim,

  • Clearly alert the IRS to the essential nature of the claim, and

  • Identify the specific year(s) for which a refund is sought.

Generally, the IRS will delay action on the protective claim until the contingency is resolved. Once the contingency is resolved, the IRS may obtain additional information necessary to process the claim and then either allow or disallow the claim.  Mail your protective claim for refund to the address listed in the instructions for Form 1040X.

Generally, married taxpayers will most like benefit by filing a joint tax return when one spouse earns significantly more income than the other spouse.  In such cases, SSMC’s would certainly want to file a Protective Claim for Refund.  However, SSMC’s cannot pick and choose years to amend their filing status, so either would file for all three years or do not file for any of the years. 

Another situation that might prove tax advantageous to file a Protective Claim for Refund would be when a taxpayer had his partner included on his employer sponsored pre-tax health insurance plan resulting in his federal wages reported on his W-2 being increased by the financial benefit provided on behalf of the spouse.

However, there are also “pitfalls” to be aware of when filing the Protective Claim.  For example, if one spouse had claimed the adoption credit when adopting the other spouse’s child, that credit potentially would need to be recaptured and would no longer be allowed if amending to a joint tax return puts these parents over the maximum income threshold.  Another example would be when spouses own rental properties where the passive activity tax rules could significantly affect prior years’ income as well as losses being carried forward when amending to a joint tax return due to the $150k income limit applicable to rental losses..

Finally, beginning with the 2013 tax year (and assuming the IRS finalizes guidelines before year end), SSMC’s will no longer be able to file as single or head of household filing status for federal tax purposes in those states that recognize same-sex marriages.  The result of filing Jointly or Married Filing Separate could have a significant adverse federal income tax impact for many SSMC’s due to the “marriage penalty”.  Therefore, as soon as possible, SSMC’s should project their 2013 tax liability based upon their new federal tax filing status in order to prevent any year end “surprises”.  Determining their 2013 joint tax liability now as opposed to next winter will allow SSMC’s to make any necessary adjustments to their federal income tax withholdings and federal estimated tax payments sooner rather than later.

NOTE:  On August 29th, the IRS Announced that all legal same-sex marriages will be recognized for federal tax purposes.



by Todd Weaver of Strategies for College

The 113th Congress has agreed on something!

Yes, it’s true!

The Bipartisan Student Loan Certainty Act of 2013 passed the House and Senate earlier this summer. After all of the moaning and groaning from both sides of the aisle, the Higher Education Act of 1965 has been amended (again) to address the changes to the Subsidized Stafford Loan that went into effect on July 1, 2013.

The passage of H. R. 1911 established a new formula for setting the interest rates on Federal loans to students and parents for the upcoming year and will be retroactive to July 1, 2013.

For Undergraduate students, Federal student loans (also known as Stafford Loans) disbursed after July 1, 2013 (the beginning of the academic year at colleges across the country) and up to June 30, 2014, will have an interest rate of 3.86% for the life of the loan. This will be for both subsidized and unsubsidized loans.

Graduate student loans through the Stafford program are set at 5.41% for the life of a loan disbursed after July 1, 2013.

Parent Loans for Undergraduate Students (PLUS loans) for the 2013-2014 academic year, will have an interest rate of 6.41%.

No confirmation yet on if the origination fees will be updated. Due to Sequestration, the origination fees for the Stafford Loans (1.051%) and for the PLUS Loans (4.204%) were adjusted on March 1, 2013.

The question remains: what happens for the next academic year? As the bill is written, future academic years will tie the interest rates to the 10 Year Treasury Note based on the price set on June 1 each year. The interest rates will be capped on Stafford loans for undergraduates at 8.25% and for PLUS loans for parents at 10.5%.

Show me the money!

For more information, visit College Search GamePLAN.




Income Taxes

Saving and Investing




  • 3rd qtr estimates due 9/15/13



2012 & 2013 TAX FACTS

  • For 2012, the standard deduction for a single individual is $5,950 and for a married couple is $11,900. A person will benefit by itemizing once allowable deductions exceed the applicable standard deduction. Itemized deductions include state and local income taxes (or sales taxes), real estate taxes, mortgage interest, charitable contributions, and unreimbursed employee business expenses.
  • For 2012, the personal exemption is $3,800. Individuals will claim a personal deduction for themselves, their spouse, and their dependents. 
  • The maximum earnings subject to social security taxes is $113,700 for 2013, up from $110,100 for 2012.
  • The standard mileage rate is $.565 per business mile as of January 1, 2012, up one cent from $.555 per mile since July 1, 2011.
  • The maximum annual salary deferral into a 401(k) plan or a 403(b) plan is $17,500 in 2013, up from $17,000 in 2012.  And if you'll be 50 or older by December 31st, you can contribute an extra $5,500 into your 401(k) or 403(b) account that year.
  • The maximum annual contribution to your IRA is $5,500 for 2013, up from $5,000 in 2012.  And if you turn 50 by December 31st, you can contribute an extra $1,000 that year.  You have until April 15, 2014 to make your 2013 IRA contributions. 


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This Month's Topics

"Million Dollar Metrics" for General Dentists

The DOMA Decision and the Federal Tax Impact on Same Sex Married Couples

Finally! Student Loan Rates Set For Academic Year 2013-2014

The FICA Refund for Medical Residents 

2012 & 2013 Tax Facts

Tax and Financial Planning Calendar for September 2013


Browse our index of previous months' newsletter topics

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In a shocking development, the IRS recently announced that they will be honoring the FICA tax refunds submitted by residency programs and individual doctors.  The catch is that only FICA taxes paid prior to 4/1/05 qualify.

For more information, go to our April 2010 Newsletter, our January 2009 Newsletter, or our February 2001 Newsletter or read through the IRS' Chief Counsel Advice Memorandum on this issue.

Let's work together to keep current on this hugely valuable tax break.  Please post whatever you read or hear regarding this FICA issue on our new Message Board we set up just for this topic.

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