Are Dental Lab Fees Deducible?

I’m an associate at an office. I get 40% of collection after lab fees. Can I deduct those lab fees on my tax return? The lab fees never really officially show up on my pay. What do you think?

First, don’t assume the owner is deducting the lab expense BEFORE calculating taxes. I have seen situations where the lab was deducted AFTER taxes were calculated, and if that’s the case, YES, you can deduct them. However, if that is not the case, you’re better off asking the owner to revise his calculations and revise your W-2.
Second, of course the owner is paying 100% of the lab. Then he’s withholding 40% of that lab from your check. So in reality, he is now offsetting that expense for 40% of the lab. At the end of the day, he’s only deducting 60%.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

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