Have you heard of the health reimbursement arrangement or HRA if you have a lot of medical expenses
This is a strategy you've seriously got to consider it can help you get a tax write-off for all of your medical expenses
Up to a certain limit. Let's break it down
First let's talk about what an HRA isn't and then what it is
Well an HRA is not a health savings account that's like a supercharged IRA for health care love them
I have other videos on that check them out and you don't have to be a business owner and if you want to put money
Into this HSA you get a tax deduction. No AGI limits are wonderful, but an HRA is different
It's also not a flexible spending account that use-it-or-lose-it
Plan that might be your work and they put some money in it and you use it or lose it
That's an employee type plan a flexible spending account. The HRA is a plan for a small business owner
You've got to have a small business to use an HRA and then you can deduct medical expenses
inside your small business
And get a tax write-off upfront. That's pretty awesome. Now, I did state small business owners. That's right
You have to have a small business because the HRA is a health reimbursement arrangement
It's a plan and it's either for you or your family members that include their dependents and backdoor yourself in so there's a specific
Structure for it. If you have an S corporation, you can't generally have an HRA in your S corp
To help you and get it direct write-off
Now you can set up some HRA plans that help you at least get around FICA but I want more than that
So usually what I do is set up a sister company where the HRA is a deduction
inside of support company for your spouse if you're married and then their dependents, which is you
Read my book the tax and legal playbook. I have a whole section on this with diagrams
If you're single you can do the same thing
But you use a c-corporation and hire yourself out of your S corporation in a C Corp now, it sounds elaborate
But the point is if you can write off an extra 10 grand and medical expenses
Some of these little structural headaches are well worth it. So talk to your accountant look at the structure and
What type of business you have and that's really the first step?
I really find the break-even point
Where an HRA pays for itself is around four or five thousand dollars in medical expenses?
Because think about it if you can get an extra $5,000 write-off, you're in a twenty twenty-five percent tax bracket
That's about a thousand to two thousand dollars and tax savings
Well that pays for the headaches of kind of doing this now an HRA plan is something that you can implement yourself
We have an HRA document that you self maintained yourself. You don't have to have a bank involved or a health insurance company
It's it's self administered
We charge around four hundred bucks at our law firm and it includes a consultation with an attorney and then you're off to the races
And you can maintain it on your own but you want to look at the cost-benefit analysis
How much do you really have in medical? Are you gonna write off $5,000 or more? And it was good?
What's it gonna cost to maintain and once you figure that out, you can decide if an HRA is good for you
finally the HRA plan can be used in conjunction with a health savings account so you can have both and
So if you do it, right you can now start getting write-offs of close to
$15,000 or more in a family situation and
You can really get a lot of write-offs for your medical expenses that can generally be difficult to write off
Itemizing is not the way to go. And if you have a small business you want to look at your options here
So do your research?
Talk to your accountant
Give our law firm a call. We'd love to be of service
we don't have to be your accountant to help you get the plan implemented and then you're off to the races and
saving big money on those medical expenses
Thanks so much for watching that video and I want to be your source for tax and legal strategies
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