Thread by @roncaruthers

1. How to write off your next mattress or hot tub. (yes, hot tub)

First off, this thread is for business owners.

BUT, you should read this even if you do NOT have a business..so you have some idea of what I mean when I say that the tax laws were all written for business owners.

2. With this strategy, here is just SOME of what you can legally deduct:

-air conditioning

-a mattress (those suckers are EXPENSIVE!)

-hearing aids

-a pool

-a hot tub

-vitamins

-weight loss programs,

-etc.

Now, HOW do you do that?

Read on:

3. What you need to set up is a Medical Reimbursement Plan, also known as a 105(b) plan.

It is NOT a typical insurance plan.

It is a legal fringe benefit plan that permits you to claim FULL deductions for reimbursing your employees (including spouse and family) ...

4. ...for medical premiums and uninsured medical expenses.

It is especially valuable because you get a 100% deduction ,

unlike when you itemize these items on your regular tax return,

where you can ONLY deduct anything above 7.5% of your Adjusted Gross Income.

4.5 AND, you can implement this anytime during the year, up until December 31st, and make the plan retroactive to cover all your costs and premiums for the entire year,

So there is still time to do this for 2020.

5. I'll give you guys an example of how much you can save in a minute, but let me explain to you how it works first.

To qualify, you must do the following things:

6.

A) Be self-employed in any legitimate business.

It can be new or part time, but it should be a sole proprietorship, a partnership (OTHER THAN a husband & wife partnership), a C-Corp, or an LLC.

S-Corps get limited deductability....no idea why.

7.

B) If you're NOT incorporated, hire your spouse as an employee, and make sure you include them on your payroll, and file all the reports.

No set hours to work about, but there DOES have to be a legit business employment relationship.

8. But, your spouse's comp does NOT have to all be in wages.

A substantial part can come from the MRP (Medical Reimbursement Plan).

If your business is a corporation, you don't have to hire anybody...YOU can be the employee receiving the benefits.

9.

C) You need to meet the IRS requirements, which include having a written plan.

If you're cheap (thrifty?), simply google

'section 105 plan document template'

And you'll get some, but I'd probably suggest paying.

If you're in my tax course, we'll post a sample tomorrow.

10.

D) You cannot discriminate....meaning you have to offer it to ALL of your employees, not just your family.

However, you CAN create a management company to JUST give yourself fringe benefits and then not have any other employees.

11. You can NOT pay the benefits in cash.

So, if it's for medical stuff, and your employees don't use it, they don't get an equivalent amount in cash, so there's that.

12. BTW, for that one clown CPA who called me a snake-oil salesmen

(seriously dude...THAT's the best you could come up with?!?)

This is all legit and spelled out in the IRS Code, Section 105 (b) (hence the name) AND in IRS Revenue Ruling 71-588.

13.

In case you missed it, the CPA got pissy because he said you couldn't do something that a 2 second Google search where I clicked the #1 link (without even looking at it) proved me right and him wrong....

....which is why I tell all of you to LEARN THIS for YOURSELF!

14. But I digress:

E) You'll also need proper 'Medical Reimbursement Request Forms'.

You'll get these the same way you got the plan documents: either cribbing them off the internet, getting them from my course, or paying someone else to get them.

15.

Final catch: you'll of course need SOME sort of documentation as to WHY a hot tub, pool, new mattress or other such thing is medically necessary for some of the less obvious things.

A letter from your doctor or chiro should suffice here.

16. Let me show you how powerful this is:

Let's say you make a $100,000 and you live in California, where you favorite financial follow on Twitter lives (ME, in case you had a rough night!)

17. And let's say you need a new mattress and hot tub to help you after you get in a car accident.

Mattress $2,500

Hot tub: $4,000

18.

Because these 2 items are LESS than $7,500, which is 7.5% of your AGI, you get to write off NOTHING, even if you itemize.

So, your taxes in this case would be $19,460 between state, federal and FICA.

19. BUT, NOW you get you one of these MRP's, so you get to write off the WHOLE THING from the first dollar.

NOW, you only owe $17,792, so you just saved $1,668.

That may not sound like a HUGE deal, but there are over 100 things that you can include in this program,

20.

So, again, you may only need ONE mattress and ONE hot tub every few years, but you need vitamins forever....and, like I said, there is a HUGE list of what this can include.

21.

Here are some of these things:

A. MEDICAL
SERVICES

1. Chiropractor
2. Christian scientist
3. Dermatologist
4. Dentist
5. Gynecologist
6. Neurologist
7. Obstetrician
8. Ophthalmologist
9. Optician
10. Optometrist
11. Orthopedist
12. Orthodontist
13. Osteopath

22. (yeah, sorry about the dual numbering....I don't know what else to do.)

14. Pediatrician
15. Podiatrist
16. Psychiatrist
17. Psychoanalyst
18. Psychologist
19. Registered nurse
20. Surgeon
21. Therapist

23.

B. DENTAL

1. Cleaning teeth
2. Extracting teeth
3. False teeth
4. Filings
5. Gum treatment
6. Oral Surgery
7. Straighten teeth
8. X-rays

24.

C. SUPPLIES AND EQUIPMENT

1. Abdominal supports
2. Ambulance fees\rental
3. Arches (prescribed for specific disorder)
4. Artificial limbs
5. Autoette (car device for the handicapped)
6. Back supports
7. Braces
8. Contact lenses
9. Crutches

25.

10. Elastic hosiery (for specific disorder)
11. Eyeglasses (prescribed)
12. Hearing aids
13. Heating devices
14. Invalid chair
15. Iron lung
16. Orthopedic shoes, excess over cost of reg. shoes
17. Oxygen equipment or oxygen
18. Reclining chair (for specific disorder)

26.

19. Sacroiliac belt
20. Splints
21. Truss (prescribed for specific disorder)
22. Wheelchair

27.

D. LAB TESTS AND EXAMS

1. Blood tests
2. Electric Cardiograms
3. Metabolism tests
4. Spinal fluid tests
5. Sputum tests
6. Stool tests
7. Urine analysis
8. X-rays

28.

E. MEDICAL TREATMENTS

1. Whirlpool Baths
2. Acupuncture
3. Blood transfusion
4. Childbirth delivery
5. Diathermy (therapeutic heat to body tissues)
6. Electrolysis (if prescribed)
7. Electrical shock treatments
8. Hearing services
9. Indian healing ceremonies (For real!!!)

29.

10. Injections
11. Insulin (even without a prescription)
12. Nursing
13. Organ transplant
14. Prenatal & postnatal treatments
15. Psychotherapy
16. Sterilization
17. Radium\kemo therapy
18. Ultraviolet ray treatments
19. Water treatment (Hydrotherapy)

30.

F. HOSPITAL SERVICES

1. Anesthetist
2. Oxygen mask or tent
3. Operating room (OR)
4. Vaccines
5. X-ray technician

31.

So, again, deductable medical insurance and even medicare stuff is included, though Long Term Care insurance has a wonky rules.

Prescription drugs are included, but NOT vitamins UNLESS they're prescribed (so get them prescribed, if you can)

32. Plastic surgery is included IF there is a medical purpose like to recover from an accident or disfigurement, not JUST because you want to stop traffic with a new set of DDD's

Handicap home improvements are included too.

33.

I could go on longer, but you get the general idea.

Hopefully, for those of you who've been waiting for this, you understand why I put it off so long....it was a little more tedious to write (and probably to read) than my normal stuff.

34.

BUT, it is an excellent reminder that you can do things tax wise that you probably didn't realize.

And there are TONS of things buried in the tax code just like this for vehicles, vacations, business travel, meals out and much much more.

35. So, I'll finish with my regular reminder.

Remember: No one....literally NO ONE...cares about your money like you do, so YOU need to learn this and not depend on a CPA or other advisor who may not get around to mentioning it, or tell you why you can't.

/end.