Tax write-offs of cheap fees

[Lobo Fan]

I was looking over some doctor's bills and saw they would charge say $400 for something, and the insurance company would allow $300, which the doctor accepted as payment in full. How do the doctors handle this on their taxes? Do they deduct the $100 from their gross income, or do they treat is as a business expense? I am hardly a tax expert, but I thought this might be a way to recover some of the AMC fee. Also, if we make it a problem for the government they might be more willing to actually enforce C&R fees. Anybody have a clue?

 

[kevco]

I was looking over some doctor's bills and saw they would charge say $400 for something, and the insurance company would allow $300, which the doctor accepted as payment in full. How do the doctors handle this on their taxes? Do they deduct the $100 from their gross income, or do they treat is as a business expense? I am hardly a tax expert, but I thought this might be a way to recover some of the AMC fee. Also, if we make it a problem for the government they might be more willing to actually enforce C&R fees. Anybody have a clue?

Doesn't matter what they charge. They only pay taxes on what they get paid. Just like the rest of us.

 

[RSW]

They can change the $100 off on their taxes only if they claim it as income. same with appraisers. We can't claim unpaid invoices as a loss unless we claim it as income.

 

[panappr]

I was looking over some doctor's bills and saw they would charge say $400 for something, and the insurance company would allow $300, which the doctor accepted as payment in full. How do the doctors handle this on their taxes? Do they deduct the $100 from their gross income, or do they treat is as a business expense? I am hardly a tax expert, but I thought this might be a way to recover some of the AMC fee. Also, if we make it a problem for the government they might be more willing to actually enforce C&R fees. Anybody have a clue?

What's the point you only pay tax on what you receive.... even if you get ripped off....

 

[Ken B]

If a doc accepts an insurance plan, they agree to charge in accordance with that plan's fee schedule. That is part of their contract with the insurance company.

If a doc voluntarily provides services free of charge or at a rate less than what they have contractually agreed to charge, that could be considered a charitable donation and might be eligible as a tax deduction.

 

[RSW]

That would have to be done for a 501c3 org..

 

[Pilgrum]

I was looking over some doctor's bills and saw they would charge say $400 for something, and the insurance company would allow $300, which the doctor accepted as payment in full. How do the doctors handle this on their taxes? Do they deduct the $100 from their gross income, or do they treat is as a business expense? I am hardly a tax expert, but I thought this might be a way to recover some of the AMC fee. Also, if we make it a problem for the government they might be more willing to actually enforce C&R fees. Anybody have a clue?

Are you thinking about dropping your fees?

 

[PropertyEconomics]

First claiming the income and then claiming the loss (which isnt a loss) results in a net zero change in tax burden .. BUT .. could invite an inspection of the rest of your return. How one would prove there is a loss when they contractually agreed to $zzz dollars would be difficult to defend at best.

 

[Tom Woolford]

I believe collection losses can be deducted from income. Check with your accountant. But thats is only for services actually rendered, not for discount pricing.

 

[hastalavista]

One would deduct the shortfall (show it as a loss) if they were using an accrual accounting system.
An accrual system might book revenue when the engagement-agreement is signed or when the invoice is sent (it is booked as income before actually receive anything).
An accrual system would also book expenses when the commitment to pay for them is made. If I put something on my credit card, I'd book it as an expense on the purchase date not when I paid the credit card bill.

Most of us (I'd say probably all of us) use a cash accounting system.
We book our revenue when we get paid; and only book what we get paid as revenue. Likewise, we book our expenses when we pay them (not when we charge them or get invoiced for them).

Therefore, if we don't get paid, it isn't revenue. Nothing to write-off (expenses are already a deduction from revenue).