High Earners: Stop the Tax Surprises and Keep More Income with Seth Peabody

You’re collecting millions, producing like crazy, and still giving away a massive chunk to taxes every single year. That usually isn’t just a tax problem — it’s a planning problem.

In this episode, CPA Seth Peabody walks through the strategies that have helped his clients save serious money (at least $50K), why many dentists never hear about them, and what proactive tax planning actually looks like.

Topics discussed:

• Tax filing vs. tax planning (and why the difference is important)
• Signs you've outgrown your CPA
• Tax strategies most CPAs never bring up
• What’s changed in 2026: bonus depreciation and the SALT cap
• How to be proactive and avoid surprise tax bills

Connect with Seth Peabody:

https://www.itxre.com/

This episode was produced by Podcast Boutique https://www.podcastboutique.com

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Transcript

Why Taxes Feel So Painful

Paul Etchison 0:47

If you're making good money in your practice right now, but it still feels like somehow too much of it is disappearing at tax time, well, your CPA might be part of the problem. Now, a lot of dentists, we think that taxes are just one of those things that you deal with in April. You send in your numbers, your profit and loss, you get your return back, and you write that painful check and you move on. But see, that is not tax planning. That is just tax filing. And today I am joined by my personal CPA, Seth Peabody, and we're talking about what a CPA should actually be doing for you. When to know that you've outgrown the person that you're using, and what kind of planning should be happening once your practice starts really making some serious money. Now you are listening to the Dental Practice Heroes podcast, where we teach you how to create a practice that is more profitable, more organized, and a whole lot less dependent on you as the owner. I am your host, Dr. Paul Edgison, author of two books on dental practice management, dental coach, and the owner of a large five-doctor practice in the south suburbs of Chicago. If you are making good money, but you still feel like too much of it's disappearing, you are in the right place. Let's dive in. So welcome, Seth. You know, before we jump into the weeds, I do want to tell the listeners that, you know, this is my CPA. This is the person I've been working with for, man, I think six years now. Very happy with the level of planning and the level of care I get from your firm, Seth. So thank you for that for the many years that you've been working with me or that I've been a client of yours. But I'd love to tell the listeners, you work with a lot of dentists, but that's not all you work with. But you do work with a lot of dentists. So just tell the listeners, I mean, who do you work with? Like, what is a typical client for you guys?

Meet A Proactive CPA

SPEAKER_00 2:31

A typical client is an entrepreneur. We have 450 clients. A third of those are dental practices, another third is real estate, and then uh the last third is a hodgepodge of different serial entrepreneurs in various different industries.

Paul Etchison 2:49

Okay. So like a lot of dental experience, but what kind of things are beneficial to you that you guys get to use from the different industries as far as I mean, everybody wants the same goal. They want to pay less taxes, I think, right?

SPEAKER_00 3:01

Well, we hope. I don't know. Some people just like to file their tax insurance and move on. But, you know, one thing we have a lot of real estate clients. So we've used a bunch of what we learned on the real estate side with a lot of our dentists because they own buildings, right? They typically own the building they're in and being able to help them. I don't know, if they're selling the building and selling, if they're they sold to another associate helping them out with the lease to helping them out with cost seg studies, things like that. And then RD studies, research and development studies, we've used that from our manufacturing clients that we've worked with in the past and learned that and how to apply it over to the dental industry.

Paul Etchison 3:45

So, working with dental offices, what are some typical issues, concerns that people are bringing to you lately?

SPEAKER_00 3:51

Uh the biggest issue is just tax planning. And I'm paying too much tax. So if you think about it, for every dollar you actually bring home after paying salaries and wages and lab fees and dental supplies and all that stuff, you bring home a dollar, 50% of that's going right to taxes. So, you know, you've said it probably, and I hear it all the time. I don't feel like I'm making that much money. Yeah. You know? And that's because you're really only keeping 50%, and that's before you even get it to the house. And then once you get it to the house, you have all your living expenses. And so you're probably just keeping 25%. And so sitting down and mapping that out and being able to take your largest expense somewhere. Most people are at 40%, depending on the state, you may be at 50, 55%. And reducing that and being able to help folks keep that money that they've worked for is very helpful. And uh that's the biggest, the biggest question is there's got to be something that we can do to minimize our tax.

Paul Etchison 4:55

Now, what would you say when a dental, because this is a podcast for dentists, I know you have all sorts of clients that you just mentioned, but when you have a dentist who now switches to you and says, Seth, like, I need help, I'm paying too much, what do they usually feel like? What's the pain point that they're coming to you to try to solve that they didn't like about their previous CPA?

Tax Filing Versus Tax Planning

SPEAKER_00 5:15

They were bringing ideas to the CPA, and the CPA would just shoot them down instead of explaining why it worked or how it could work. You know, they're getting calls April 15th, and hey, you owe a hundred grand. We didn't know that you owed 100 grand. And that's very simple. You can just sit down and do tax planning during the year, and you already know by the time you get to April how much you owe. And it's not a surprise. So that's, you know, most CPAs are happy just taking numbers out of QuickBooks, dropping them in, their return, hitting print, sending a bill, and moving on. So the biggest thing is just tax planning, somebody being proactive and getting them on the schedule. Just like in the dental industry, you're always sending out, hey, you know, you got your cleaning coming up and you're actively going after the patient. CPAs aren't actively going after their clients. They schedule meetings to do planning. Yeah.

Paul Etchison 6:12

Yeah. And I'll say that you do do that. You know, I feel like you're chasing me down. I'm not chasing you down ever. I think you're always like, hey, it's time for tax planning. Let's go. And I will say, you know, it's interesting. This is kind of a funny story. My first or maybe my third year of practice ownership, I had a CPA. It was just always my CPA that I had, you know, growing up, you know, mom and pop sort of thing. And I got the return back and I owed like$120,000. Now, I didn't have$120,000 at that point. I was like, oh, what the hell is this? Now this is it's time to pay the taxes. So I open up the return and I start looking for it, and I can't find any evidence of my 1099 associate. So once we put that in there, I was getting like a$40,000 return. But had I not looked, I would have had to pay that, you know, and I and I was ready to pay it. So that was my last year with that guy because I felt like that was just kind of an egregious error. What I love working about you, Seth, is that Seth will come to me, we will do tax planning twice a year, and you tell me what my expected tax amount is. But then you're also offering me things such as, I mean, talk about like the things that you offer. Now, these are not through Seth. Seth is not some sort of broker for investments, but there are a lot of different investments in ways that we can reduce our taxes. Rather than paying the IRS, we're putting it into an investable thing that has tax credits. Talk about that.

SPEAKER_00 7:30

I don't like paying taxes either. Yeah. So I try to go find the best ways to minimize my tax. And then I work with other folks around advisors that are finding tax strategies and even clients. So it's a big kind of uh community of collaboration, if you will, of finding strategies, learning how those strategies work, and then applying them to various clients. For example, we had a client, they're both dentists in south of Atlanta, and one of them was asking me about tearing her playground out and putting in a carriage house that they could rent and how that depreciation was going to work. And so I kind of explained it to her, and then the next thing I know, we're getting into short-term rentals, and she's thinking about quitting at the practice and running a real estate company and how all that would work. So, and I've had my own real estate and do the different tax strategies so I know how it all works.

Paul Etchison 8:28

Do you have some criteria or is there something that somebody could look at their current CPA and say, I've outgrown my CPA. My practice is doing really well. It's time to move on. Because I I work with a number of coaching clients that, you know, they've been using the same person for 15 years before they were even in dental school. And at a certain point, it's like, hey, I think you need a little bit more complicated tax preparation. You're making a significant income.

SPEAKER_00 8:52

It's typically around half a million. So if you're making half a million or more taxable income, so that's you know, your W2, your K1s, 1099 income, you know, add that up. If you're making half a million, usually we can start providing value at that point. Anywhere, somewhere around, let's just say 50 grand is pretty easy to save a client in taxes per year. And if they're not providing any value to where they're actually reducing your taxes, you probably have outgrown it. If you're at a lower than half a million, there's not a whole lot that people can do. But once you hit that threshold, for them just to give you the return and annual a bill is not enough value. There's no value in uh entering numbers and hitting print. You know, AI is going to take that over in the next three years. It's what value, how are you reducing my tax? How are you increasing my income or net worth? Yeah. That's what they should be asking.

Paul Etchison 9:52

So what are some common tax opportunities that you see with dental practice owners that maybe possibly get missed and then you guys find them? Or what are some things that we should be making sure our CPA knows about?

SPEAKER_00 10:05

Cost segregation studies. I'm sure you've heard of that because you're familiar with real estate, but a lot of CPAs don't know that you can use the losses from the cost seg from the real estate against the practice income and their W-2 income.

Paul Etchison 10:21

Talk about what cost seg is. So if anyone's ever heard of it.

Signs You’ve Outgrown Your CPA

SPEAKER_00 10:24

Yeah, cost segregation study is a study that segregates the cost in a building. So you have engineers come in and they break down the components, you know, your plumbing, your wiring, all that falls in different, what the IRS calls useful lives. So if it hits in a five, seven, fifteen useful life, you get to write it off now, all of it, pretty much, because of the bonus depreciation.

Paul Etchison 10:50

Versus writing it off over what is it, 27 years or what is the law?

SPEAKER_00 10:55

For commercial buildings, it's 39 years.

Paul Etchison 10:58

Oh, cool. So take the whole value divide by 39, and that's what you write off in depreciation every year.

SPEAKER_00 11:04

Every year. Right. Right. And CPAs don't know. I'm not an engineer. I don't know what goes into building a building. Uh, if I gotta do anything here, I call my at my office, I call my contractor. He's better at it. And if I need to go to the dentist, I don't do the work on myself. So when we get the report or we get the closing statement, we just see you spent$2 million on a building. We don't really know what's in there. So we work with cost segregation companies that have engineers. They go in, they do an engineer study, they give it to the bean counters who tape that study and put it into a report, and then they send us the report. What does that mean? Well, if you bought a million-dollar building, you're probably getting somewhere between two to three hundred thousand in deductions the first year. So imagine you're at a 40% rate, you got a$300,000 deduction. That's$120,000 in taxes all in the first year. So I've seen the costs say sometimes completely wipe out all the income, but definitely greatly reduce the income so you're in a much lower tax bracket.

Paul Etchison 12:09

And what about people who do not own their property, say they're leasing a space? Is there anything special for them?

SPEAKER_00 12:15

If you're a tenant and you're not paying, or excuse me, the landlord's not paying for your TI tenant improvements or renovations, you'll get to write most of that off. But depending on what you do, sometimes we suggest having a cost segregation study on the improvements. Because some of it falls into smaller lives. It depends on what you do and what's going on. But uh yes, if you're leasing your space and the landlord's not giving in you what they call TI allowance or tenant improvement allowance, and you got to come out of pocket with it, then definitely you have some opportunity to take some deductions.

Paul Etchison 12:50

You know, I I wonder, can you think of a story where you've worked with a client who is a dental client that came over to you that what you discovered or what you were able to do for this client justified going back and possibly amending previous returns?

Cost Segregation For Practice Owners

SPEAKER_00 13:05

Well, back in the day when uh I'm sure everybody kind of knows what the qualified business income deduction is. It's a deduction for business owners. Before they changed it, before Trump was uh his first term and changed the tax rules and came up with a new qualified business income deduction, the laws got so misinterpreted that they were in that section of the tax code, they define orthodontists as manufacturers, and they could take a larger deduction. So when we found out that they were misinterpreting the law, the judges were for the IRS, we went back and filed a bunch of minute returns for our orthodontist clients and got them a bunch of money. So things like that, just being aware of what's going on with different tax strategies, different deductions, and knowing how to apply those to clients. Same thing with RD credits. I'm sure you've probably heard of different people doing RD for the dental industry, finding, you know, hey, this actually applies to you. We can go back and amend the tax returns for that.

Paul Etchison 14:14

Is that typically something you're doing for dental clients? Is the RD credit for manufacturing crowns, lab things? I mean, a lot of 3D printing and stuff now.

SPEAKER_00 14:21

I would say there's about 5% of our total dental clients that qualify. Because it's uh it's about how much revenue you're producing out of that uh production, that revenue stream, what are you producing out of there, and then what can you apply in terms of cost and wages that you're paying to develop that or manufacture that piece. So really 5% qualify, but we get clients on the phone to identify with the research and development group, and then teach the client hey, if you do this more or you rearrange or reorganize or change your process, you may start qualifying at a larger amount. You know, a lot of them do qualify, but it's so small it's not worth doing the report for. But can you increase that credit?

Paul Etchison 15:18

So I want to come back to one thing that you said. You said that if someone's making a half a million dollars or more, that there should be some kind of, I think you said planning or strategies. There should be strategies to save them. Like, can you go a little bit deeper on that? Like, what sort of strategies are we possibly missing or things that we could take advantage of?

Credits And Investments That Cut Tax

SPEAKER_00 15:36

The easiest low-hanging fruit in the tax code is independent oil and gas funds. There's a small paragraph in the tax code that allows pretty much anybody to deduct some portion of that investment they make in the initial year. Basically, the oil and gas guy has paid off Congress. Congress makes the rules for the IRS and they got preferential tax treatment. So, which benefits you, me, and anybody that's an accredited investor. So you can invest and take a deduction. And then there's different rules for different tax strategies, and a lot of times they require time. The oil and gas is the easiest. Yeah, we talked on cost egg studies, RD credits. There's a lot of state credits a lot of people don't know about. So we get into working with clients on, you know, what's your state, various state credits. Because a lot of states, you know, you're seven, eight, thirteen percent tax in the states as well. If you're making half a million a year or more, you should be saving 50 grand in taxes easy a year. What we do is basically build out your tax return. You've seen it, and we just go line by line, do a column comparison and say, okay, this is what it looks like. These are the opportunities. If you have a big capital gain, there's some indexing funds that we can introduce to you, which basically build up a bunch of losses, capital losses. So it just it really is dependent on the client and what money they have to invest, time they have to invest, but spouses too. You may be running a business, and my wife can go run some Airbnbs, and we can benefit from the depreciation from that. So it's it's really one-on-one, but specific to that client and how much you know they want to put into saving on taxes. Because it is a little work. The IRS isn't gonna make it easy.

Paul Etchison 18:19

Yeah.

SPEAKER_00 18:20

They make it easy for you to write a check and send it to them.

unknown 18:23

Yeah.

SPEAKER_00 18:23

Which they lose in the mail repeatedly. But get back kind of the the main meat of your question is if you're half a million or more and you're not saving on taxes, then your CPA is not providing any value to you.

Paul Etchison 18:38

Yeah, totally agree. And I and I would say working with you, it does feel much more proactive than my previous relationships with previous CPAs. So let's talk about what are you seeing right now at the IRS? I mean, we were all freaked out, I think, yeah, well, I don't know, my hair years ago is, but there was, I think Biden was bringing that bill and they were just gonna get all this infrastructure in the IRS and they're gonna come get us and all these audits and all this stuff. And then it kind of just doesn't feel like that anymore. I'm not sure like what you know or if you're even, you know, what do you see? What do you hear?

SPEAKER_00 19:08

Well, they did that initiative to hire people. The problem is right before that, they tried to hire 500 new IRS agents, and after three years, they had about a hundred. And that's because they were paying them less than thirty thousand dollars a year.

Paul Etchison 19:24

Oh, that doesn't work, huh?

SPEAKER_00 19:26

No, no, you know, very few people want to go work at the IRS and uh for$30,000 a year.

Paul Etchison 19:33

That's one way to reduce your taxes, I suppose. Right. Not make anything.

The IRS Right Now And Notices

SPEAKER_00 19:37

Not making any money. Yeah. And then when Trump came in, they've they have uh whittled down some uh departments. Right now, like the current state, when Trump was inaugurated, they lost all their C-level folks, the CEO, CFO at the IRS. We're on our seventh commissioner in a year and a half, or not even a year and a half. So the U.S. Treasurer right now is the also the IRS tax commissioner. So we don't have an official tax commissioner. The one that we finally got through Congress was there for two months and neglect. So the state of the IRS right now is a circus, it's a disaster. We're getting uh tax notices. Well, perfect story. We have a client that emailed me and said, Hey, I got my refund today, and I got this tax notice that said I didn't file my tax return. Makes sense. So she goes, I don't know how that happened. And we got a couple others. We got one this past week that said, Hey, you didn't sign your tax return.

Paul Etchison 20:47

I think that was I was sent you something like that for mine.

SPEAKER_00 20:50

That was you, that was you. That was me. Right. Yeah. It's like you didn't sign your tax return. It was like you electronically filed your tax return. It's like, what you know. So because of the shutdown, they were already having problems, and then the shutdown just complicated it, compounded the problems.

Paul Etchison 21:06

So what does this mean?

SPEAKER_00 21:08

I'll say this: if you get a tax notice in the mail, don't get nervous. Just send it to your CPA. Because 90% of the time they're wrong. And we have had clients kind of freak out, but you know what? It's they're gonna be wrong mostly the time.

Paul Etchison 21:23

Yeah. Well, I remember a perfect example was Q4 2020. We had to go through something together, and you and you wrote the letter, and they said, okay, after reviewing the letter, you're right. You know, forget about it. Sorry about that. You keep that$45,000 we were asking for. And it was just like bananas. And it's like you, me as a taxpayer, just as anybody, like, I don't want to call the IRS. You know, one thing I thought was interesting is I have a buddy who is a, he's actually a he's an attorney, and now he's actually working on the IRS side. But he used to work at this one place, and he was telling me there was a business where people would just call the IRS all day, and you would call them and pay 50 bucks to jump the line. And that was their business. It was bananas. I was like, I cannot believe. And you said he said we do it all day. You save you hours on the phone, you just jump the line for 50 bucks.

SPEAKER_00 22:13

So we were paying$500 a month to have that service. Yeah. Wow. We dropped it because it wasn't helping anybody. But uh a tidbit, if you ever call the IRS, don't call them on Monday, Tuesday, or Wednesday. Call them Thursday and Friday because they issue the tax notices and most everybody gets those on the weekend. So then everybody's calling on Monday, Tuesday, but they don't have enough people to answer the phones. Yeah. If they're sending out notices like they sent to you and these other clients that are calling and trying to figure things out, then that's just compounding it. Their software, I was talking to a forensic accountant this morning. I think the software is about 40 years old at the IRA.

Paul Etchison 22:55

Look at the font they use on your letters you guys get. Like nobody's using that anymore.

SPEAKER_00 23:00

You can't email anybody over there. They accept facts. I was laughing about that with another client this week. They can't email them and they accept letters in the mail, which they lose all the time. And then you can fax them sometimes, but no emailing or any other way of it.

Paul Etchison 23:18

I think our youngest employees wouldn't even know what a fax machine is, you know? That's crazy. Well, you know, talk about like 2026. We're going into a new year. People are filing their taxes right now as this episode comes out. You know, this is the time of the year where we go. Crap, I hate this. I wish I didn't have to do this. This sucks. I got to get my stuff together. All this jazz. What do we have to look forward to? Anything new for 2026? Anything s exciting? Anything fun?

2026 Changes Bonus Depreciation SALT

SPEAKER_00 23:40

Well, you have the OBBA that they passed, which really didn't benefit anybody in a 30 plus percent bracket. We got bonus depreciation. That was the biggest thing that they re-upped it to 100%, which is basically you're writing off equipment the year you buy it, as opposed to having to appreciate it over five years or a smaller, smaller amount of bonus depreciation. So that was the biggest benefit to most business owners, is you're gonna write off that equipment. So if you have some, you can what I would call front end load or back end load equipment, depending on like if you need if you're trying to stretch it out over a couple of years, it may benefit you to push it all into one year, right? But there's very little in the new bill that they passed that benefits anybody that's an accredited investor or uh, unfortunately. It was it was a bill for the masses, not for us. You still got the qualified business income deductions, so if you get your income down low enough, which is a benefit to tax planning. If you do tax planning, not only are you getting an extra deduction, you may qualify for more deductions. The salt deduction. I don't know if you had heard about that. Folks in higher income tax states or property tax states were complaining because the state and local tax deduction limitation was 10,000. They raised it to 40,000 based on income. So most everybody that's listening to this was limited to 10,000 and their taxes were probably north of 40. So you're losing 30, 40,000, 50,000 in deductions, which is somewhere between 15 to 20 grand a year, with the tax planning and how they put that law in there. It's just an extra deduction.

Paul Etchison 25:30

Yeah.

SPEAKER_00 25:31

So if you think of it this way, if you're doing tax planning, you get to compound deductions. And if you're compounding deductions, you're paying less tax. So I would look for this year is planning. Understanding what your tax is in June for the whole year. Because we know by June, you know what the practice is going to do the rest of the year, or you have a pretty good idea. You probably have history from prior years. You know what the first six months have done. Um, so you can come up with some really concrete estimates. And if you don't, if you're not going to do tax strategies, because let's say in 27 you're expanding, at least you know what your tax is, and then you can save monthly. You know, wire, you know, whatever divided by 12 to your money market account and let it sit there and accumulate. And so when your beam counter calls you in April and says, hey, you owe$100,000, you don't have to scramble around and go pull money out of a line of credit. It's already sitting there and save it. So peace of mind to me is one big thing about the tax planning, just knowing, knowing that you know your tax and that you have it in a bank account sitting somewhere instead of getting that frightening call in April where you got to scramble around and find money.

Paul Etchison 26:49

All right. So when you say tax planning, like what does that actually look like in the real life for like a dentist? I mean, are you like literally sitting down and projecting the year and then deciding what moves you're going to make? Or is there like strategies that we get to take advantage of when we do plan ahead?

SPEAKER_00 27:06

You're doing planning with your coaching clients, right? And you're planning out, all right, what's production, what's collections, let's map this out, let's have a goal. How come people don't do that with taxes? They just show up and you're drinking wine in December and you're like, oh crap, I didn't do any tax planning. You can do planning any point in the year. Do it in February or March. You know, sit down and say, okay, what does my tax look like this year? And what can I do to mitigate that tax?

Paul Etchison 27:39

Now, if someone is listening right now and they're thinking, okay, I probably need a more proactive CPA relationship. What is the best way that they can get in touch with you, discuss if you're a good fit, and see what opportunities they might be missing that they didn't even know about? Like, how do they reach out to you?

SPEAKER_00 27:55

You can fax us, no, just kidding. Email, text, you can go on our website and we have a client form there, itxre.com. If you fill that out, it comes back to us and we can get in touch with you. So those are, you know, three easiest ways.

What Tax Planning Looks Like

Paul Etchison 28:11

And just so you know, listeners, that link will be in the show notes. ITXRE. Now, funny story is I didn't know, like, I just thought these are like random letters that were some kind of formula to like some maybe interest compounding or something like that. But I just found out from one of our mastermind members when we were at our mastermind last November, is that ITXRE is just a short-handed abbreviation for income tax return. And I felt like, wow, I've been working with you for a very long time, Seth, and I've never put that together.

SPEAKER_00 28:43

Well, most people don't. And most marketing people questioned me about it. And I said, Well, aren't you supposed to ask about the brand and what it means? And now we're having a conversation about it. And so the marketing people don't like that response. But uh thanks for having me. And if y'all have any other questions on taxes, please feel free to reach out.

How To Reach Seth ITXRE

Paul Etchison 29:04

So, what this really comes down to is pretty simple. At a certain point, it's just not always about how much money you're making, it's about how much money you are keeping. And if your CPA and you, from a tax standpoint, are reactive, they're not helping you plan ahead. Or if the only time that you hear from them is when it's time to file, there is a good chance that you're missing some opportunities and you've probably likely outgrown them. That does not mean that taxes have to be confusing or overwhelming. It just means you need someone to help you think a little bit more strategically, not someone who is only cleaning up things after the year is already over and just keeping you compliant. So if this episode made you think a little differently about your current CPA relationship, that's a good thing. It is always worth asking some questions and wondering whether the person you're working with is actually helping you build wealth or if they're just helping you stay compliant. And if you want help building a practice that's more profitable, more organized, and a whole lot less dependent on you, go to dentalpracticeheroes.com slash strategy and book a strategy call with me. It is a free call. There's no pressure. We're just going to have a conversation and talk about what is possible. And before you go, if this podcast has been helpful for you, leaving a five star review is the easiest way to support it. It takes about 30 seconds and it helps other dentists find the show. And I am extremely, extremely grateful for it. Thank you so much for listening, and we will talk to you next time.