The Amber Stitt Show

Focus on Money: Help Your Clients Owe Less to the IRS this Tax Season

November 15, 2022 Amber Stitt
The Amber Stitt Show
Focus on Money: Help Your Clients Owe Less to the IRS this Tax Season
Show Notes Transcript

I am very excited to share tax strategies with you all in this episode. I interviewed Todd from TASC to discuss how business owners can benefit from opening up an account this year.

This episode discusses what types of small business owners can qualify for and what healthcare expenses you may need to start tracking for reimbursement.

The "HRA" is a Health Reimbursement Account under IRS section 105. It is a way for small self-employed business owners to take 100% of their family's medical expenses, 

At a high level, what qualifies?

-Health Insurance
-Other supplemental insurance
-Medicare expenses
-Vision Insurance
-Out-of-Pocket Expenses
-Term Life Expenses up to $50k
-Long-Term Care Insurance premiums 
-Misc to include cold remedies, aspirin, etc.

Todd frequently speaks with these associations to discuss the benefits of this account. 

·         NATP ( National Association of Tax Professionals)
·         NSA (National Society of Accountants)
·         NSTP (National Association of Tax Professionals)
·         NAEA (National Association of Enrolled Agents)
·         NCPE (National Continuing Professional Education)
·         Western CPE
·         NAIFA(National Association of Independent Financial Advisors)
·         Back to Basics Tax Seminars
·         Gear Up tax – Checkpoint learning Thompson Reuters
·         Spidell – Caltax
·         Arizona Society of CPA’s
·         LAT Seminars

Contact information to book your consultation with Todd:
Direct Line: 608-268-8875

For the 2021 Year End Reports and EVERYTHING you need for AgriPlan and BizPlan HRA:
Check out our website at http:\\
TASC COVID-19 resource pages. Keeping our customers and partners up-to-date:
TASC Responds Website:
TASC Capital Connection Blog: TASC Capital Connection

Amber 0:03
Hello, and welcome to the amber Stitt show. I am your host, Amber Stitt, and today we welcome Todd from tax saving strategies. So thank you for being here today, Todd.

Todd 0:16
Great. Thanks. Thanks for having me. Amber. Look forward to the session. Yeah.

Amber 0:19
So today, as I was thinking about our episode, I really wanted to dedicate this to the small business owner. So those of you that are starting to want to work on focusing on getting money smart on the pathways of peak performance podcast, and so today, I wanted to focus on tax saving strategies before the year-end, but really in the future years, too. And so with Todd's help, we'll learn a little bit about how we can do that. So hopefully by the end of this episode, there's an awareness that's being brought to the table about how many or most business owners could save like I did, by working with one of these special accounts, tax advisors and TASC, the total Administrative Services core. And so Tom will talk about that a little bit more today. But I really want to help people learn about how families can or businesses and work families combined can be reimbursed for some of these medical expenses to provide some tax aid. So Todd, let's do a little background on you. share with the audience a little bit about what you do and then how these accounts can help people. Sure.

Todd 1:31
Great, thank you. My name is Todd key, and I like Amber said was tasked with the Ministry of Service Corporation. It's a third-party administrator and employee benefits. business for over 40 years I've been tasked for 15 years and work with small self-employed business owners like the ones hopefully we get on here today to help them come up with a creative tax-saving solution through a IRS section 105 that has been around since 1954. So this is nothing new or revolutionary here today, folks, but it's just a way for a small self-employed business owner to you know really be able to look at options as a way to increase the tax savings center on a family's medical expenses. Yeah,

Amber 2:11
so I met you a few years back as my tax advisor. I think she had attended one of your seminars, you travel a lot to speak about not so much numbers, but you're in the accounting community a little bit right is that kind of where you're hanging out?

Todd 2:26
Yeah, I definitely work. We don't really work directly with the clients. We go to their tax advisors because that's their trusted advisors. So I really go into work with a lot of tax software and go to their seminars where they get their continuing education to hopefully educate them on making sure that they're aware of this tax saving solution that's out there. And all the combat that small self-employed business owners or their clients like this could lead to tax savings.

Our average client saves an excess of $6,000 a year in tax savings. So there's a unique solution for that when I would hear that number I'm like, okay, sure, that doesn't seem accurate. But it's just a set of rules that exist in the code. And so, you know, it's interesting as I had done one of these accounts with you for multiple years and last year, I didn't think I would qualify because I did have a little bit of w two income and but mainly 1099 income. And when I reached back out, you know, hey, you know, you actually can so that was really neat to hear that there are multiple ways this can shake out but let's let you talk about the actual title of this because I feel like people confuse this with an HSA FSA. And then they think they can't do one of these because another thing exists, and they're depositing into a different account during the year so let's let you explain it a little bit more in deeper detail.

Todd 3:53
Sure. an HRA is a health reimbursement account, which as I alluded to earlier, is under IRS section 105. It is a way for a small self-employed business owner to take 100% of their family's medical expenses, which really go into like two different buckets. When you look at yourself the number one would be health insurance, all your health insurance, long-term care insurance, and any other supplemental insurance for people that are in Medicare, dental or vision insurance. And then the second one would be obviously the out-of-pocket expenses, your pocket co-pays demonstrations. If you look at these, there are probably a lot of things on here, you probably had no idea that you could even do doctor right runoff through the business. And these are all ones. These are not uncommon to any like a field of flexible spending account or an HSA account in the past. They're all the same type of ones that can qualify. Also in addition to that, if you have a term life policy, you can deduct that health premium as well on that in addition to the over-the-counter items, which is also a big one that's been out there in the last year and a half that so eligible as well. So you know the and this means and as a cold remedy such as aspirin, things like that are also eligible to be deducted as well. Yeah,

Amber 5:06
I think I think we forget about these items that I've noticed that even Amazon will do something like they'll have a little statement HSA approves the type if it's HSA approved that might also be on the list for the HRA there, for the most part pretty common I think from what I've noticed,

Unknown 5:24
and even the ones that are here that you might be thinking of, if you have a letter of medical necessity or a prescription from your doctor, those are also eligible to be deducted at that point in time. So so really, let's get into let's what is it. What is it and how it can benefit people? And what are the differences maybe some of you may be coming to an HSA, a health savings account or a health savings account. As for somebody that has a high deductible health plan, it affects their individual tax return, you're putting money in an account and it's only four out-of-pocket medical expenses. Okay. So the HRA is a health reimbursement account is for a business owner. So you may ask, well, who can all qualify for that? It can work for any tax entity, so it doesn't matter if you're a sole proprietor or an LLC or an S corp or a C Corp, or a partnership. They all can qualify for it. So the nice thing too with an HRA is you're not putting any money into an account so to speak like you do with an HSA. You actually are just setting up the plan and you're incurring an expense to pay for the experience you get reimbursed back in your business for the expense and you're able to deduct the expense. So the whole key to it is you have to this is an employee medical fringe benefit. So you have to have an employer-to-employee relationship and in most cases a small self-employed business owner that's one in the same so you basically you're your employee, plus you're the owner of a business, okay. So at that point in time, you're able to under the rules of attribution, able to not only take it for yourself as the employee, but also for your entire family, your sponsors, kids, and so that that's where really the tax savings can leave least it is like when I started 15 years ago, I remember I remember doing this type of plans and the average client and saving $1,800. Now 15 years later, we're at over $6,000 to ask for a little bit of a background for people talk about our company that I worked for, and we've been doing this for over 40 years. We're kind of ones that got the start in it back way back in the day, our phone had gotten us started really looking at ways for small self employed business owners, how can we help them increase their tax savings from their medical expenses and that little IRS section code section 105 was out there and this was it was a way to help them really help that small business owner be able to take those expenses and trade it deduction with them.

Unknown 7:57
What I liked about the process is that my email chains if there's questions you'll work you'll be you're okay to BCC it on the emails. As we talk with our tax advisor. We have a question, how do we populate and enter the data to produce the information necessary for our tax filing. It's pretty easy to do once you know that you are eligible and then with your team, it's been great to work with you guys on just getting things done on an annual basis. So anything else they should know about? Or maybe we could talk about? It's not so much any tax advisor can help their client, the client, the business owner does have to pay the nominal admin fee for this plan. Correct?

Unknown 8:41
Yeah, so that's a good point. So what does our company actually do? And that's why do people want to use us? So you may ask, why doesn't somebody go to a tax advisor and have them do that? Well, as you're aware of there's so many different tax codes that are out there. And so what our company does is we do all the comp the compliance and administration in the second plants we do all their their plan documents, a summary plan description we can do over a year and reports make sure everything's set up legally with the IRS. And one of the things why you're really a big component and why in an account with us, us and all the different accounting associations throughout the country. Really recommend using us because we have 100% audit guarantee, which means that we will stand behind the client in terms of any legal representation that needs to be if they ever get audited and are challenged on their tax savings. They do one through this. So that's huge. That's a huge component of it. And that's why people want to use this because it's like insurance. Basically, it's been able to protect that tax savings that they're having on a year to year basis and making sure that is that they can use it and have the peace of mind that it's being

Unknown 9:50
tracked. Every single day people don't really think about this is getting close to a year but we don't match time. So very simply, it would be a matter of just being introduced to your team to us specifically having a complimentary consult, just making sure someone's eligible and then really as long as they are they need to set this up before the end of the year to qualify for the 2022 year. Is that how that works?

Unknown 10:18
Yeah, that's a good question. So the other nice thing about this, the HRA plan is you can prep dry feet as planned for the year okay. So any of those expenses that you that you've already incurred about and you're thinking, Oh, it's too late to practice here, though, you can still go back to that beginning of the year. That's why it's our busiest time of the year. But I would really recommend Yeah, I mean to to ask for a consultation. We can talk about your own specific situations, if we can get your accountant involved if you want to so I can make sure that they understand how it works. And then also give you an estimated you know what your tax savings could represent for having one of these plans set up.

Unknown 10:57
Okay, perfect. So I already have it on my link tree, the way to book a consultation with you, Todd, but then we'll also link up more information about task itself in the description boxes and show notes on the podcast that way that they can find you and then any of the audience members, if you have any questions certainly reach out to me and I'll point you in the right direction. Task does more than just the small business account that we're talking about here. There. They do a lot more but on the small business side talks, talks that guy that I go to for my HRA, so just really wanted people to be aware of this. I mean, I don't know how many times I bring this up and people look at me, and they have been either nod their head because they feel silly that they don't know what an HRA is or they nod their head because they think we're talking about the HSA. So the beauty is you can have multiple buckets to kind of work from as an owner, but also to have some reimbursements or the deductions for tax savings. So anything else that you can think of besides just really reaching out and having that consultation?

Unknown 12:00
Yeah, the other thing too is the one of the assurances that we provide as well is that if you don't have $2,000 of total medical expenses, we will refund your $595 administrative fee back to you because we don't want your money unless you're gonna save more like the cost of the plan is so and with 15 years of experience like pretty much nice tell you exactly what whether you should or should not be involved in something like this, but it's, it's it's great for people that are looking for they're there to offset all their expenses that they've incurred over the course of the year. And you know, you can't deduct those expenses. You take them into your account, you can't deduct them, unless you exceed seven and a half percent on your adjusted gross income on your personal return. So you may take all those expenses and receipts into your accountant, but unless you exceed that you won't be able to deduct any of those dollars. So that's why by setting up an HRA through your business, if you're able to do that you're this is a good solution to be able to provide. So

Unknown 12:57
I'm excited to share this with everybody and I know that I've benefited from it. And we've been thankful that our tax advisor reached out and let us let us know years ago so thanks so much for being here, Todd and I'll the audience will let you know if they have any questions.

Unknown 13:11
Great. Thanks for having me. Have a everybody have a great day. Thank you.

Unknown 13:14
Great day Talk with you soon. Thank you for joining us on today's episode of the amber Stitt show. For more information about the podcast books, articles and more, please visit me at Amber Until next week, enjoy your journey at home at work. Thank you for listening. Bottom line is you right so much this time what do you want us to find? This car inside out

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