Can I deduct a loss for non-paying patients?

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financial.freedom
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Can I deduct a loss for non-paying patients?

Post by financial.freedom » Sun May 26, 2019 6:09 pm

One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?

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CAsage
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Re: Can I deduct a loss for non-paying patients?

Post by CAsage » Sun May 26, 2019 6:10 pm

I think this type of thing has come up before; you cannot deduct a loss on income you did not receive. It just lowers your overall income....
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

Ruger
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Re: Can I deduct a loss for non-paying patients?

Post by Ruger » Sun May 26, 2019 6:23 pm

I had the same issue before I retired, and the accountants answer was always "no".

fru-gal
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Re: Can I deduct a loss for non-paying patients?

Post by fru-gal » Sun May 26, 2019 6:28 pm

financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.

runner3081
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Re: Can I deduct a loss for non-paying patients?

Post by runner3081 » Sun May 26, 2019 7:00 pm

fru-gal wrote:
Sun May 26, 2019 6:28 pm
financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
He is saying that Medicare pays very little for the services provided to their members (commercial payers make up the difference for low Medicare payments), not that they don't pay.

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financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Sun May 26, 2019 7:13 pm

fru-gal wrote:
Sun May 26, 2019 6:28 pm
financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
Yes, I encounter it every single day, many times a day. One example: Have you ever had a preoperative chest X-ray? Denied

But I don't want this to be a political or medical discussion -- I just want to know whether or not it can be deducted.

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financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Sun May 26, 2019 7:14 pm

runner3081 wrote:
Sun May 26, 2019 7:00 pm
fru-gal wrote:
Sun May 26, 2019 6:28 pm
financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
He is saying that Medicare pays very little for the services provided to their members (commercial payers make up the difference for low Medicare payments), not that they don't pay.
No -- they straight up deny and refuse to pay for many things. But I don't want this to be a political or medical discussion. This is a new hospital for me, and just want to know if it can be deducted.

Bfwolf
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Re: Can I deduct a loss for non-paying patients?

Post by Bfwolf » Sun May 26, 2019 7:17 pm

You've already gotten the deduction: you never received the income and therefore won't be taxed on it.

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financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Sun May 26, 2019 7:20 pm

CAsage wrote:
Sun May 26, 2019 6:10 pm
I think this type of thing has come up before; you cannot deduct a loss on income you did not receive. It just lowers your overall income....
Thanks! Appreciate it. Do you have a source? I'm trying to read through the IRS guidelines.

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gasdoc
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Re: Can I deduct a loss for non-paying patients?

Post by gasdoc » Sun May 26, 2019 7:22 pm

Bfwolf wrote:
Sun May 26, 2019 7:17 pm
You've already gotten the deduction: you never received the income and therefore won't be taxed on it.
Yup. That's it. Well put.

gasdoc

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financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Sun May 26, 2019 7:25 pm

Ruger wrote:
Sun May 26, 2019 6:23 pm
I had the same issue before I retired, and the accountants answer was always "no".
Thank you for the reply. I'm read the IRS guidelines and a little confusing. Before you retired, did you try to minimize your time at such facilities? I work at a few locations, and maybe the best strategy is to try and minimize the time I spend working at the hospital with mostly Medical and Medicare patients.

tioscrooge
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Re: Can I deduct a loss for non-paying patients?

Post by tioscrooge » Sun May 26, 2019 7:55 pm

A friend of mine is an a ER physician and in a large group of 50 plus providers group. He said that his group is organized as a not for profit organization even though it is an eat what you kill practice . They Call all denied and non collected money as charity care that allows them to call themselves not for profit. I don’t know what other advantages they have as a physician group organized as not-for-profit.
Whether you think you can or you can not, you will be correct.

Tachyon
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Re: Can I deduct a loss for non-paying patients?

Post by Tachyon » Sun May 26, 2019 8:07 pm

No, cannot deduct as losses. I looked into this awhile ago. Don't feel like trying to find exactly where.
In a sense, it's already a deduction because you didn't get the income. In accrual based accounting, Let's say you see a patient a accounted $500 as revenue and $500 for accounts receivable. They never paid. In THAT case, you would deduct $500 as bad debt against your $500 revenue. But most physicians don't do accrual accounting. So in essence, you didn't get paid for it, you don't get it as a deduction.

Furthermore, such deductions would lead to rampant abuse: "I'm worth $10,000 per patient, but only collected $1,000, so I can deduct $9,000".

You have an additional issue. Somewhere in your contract with the hospital is for your to see any / all patients they require you to see. So for you, it's not bad debt, it's a contractual obligation that you agreed to.

Tachyon
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Re: Can I deduct a loss for non-paying patients?

Post by Tachyon » Sun May 26, 2019 8:10 pm

tioscrooge wrote:
Sun May 26, 2019 7:55 pm
A friend of mine is an a ER physician and in a large group of 50 plus providers group. He said that his group is organized as a not for profit organization even though it is an eat what you kill practice . They Call all denied and non collected money as charity care that allows them to call themselves not for profit. I don’t know what other advantages they have as a physician group organized as not-for-profit.
I don't see how this would make the physicians any more money. They would still get individual income tax on anything they individually earn. Anything at the entity level is an expense anyways. And the Net Income would need to be 0 at the end of the year in not-for-profit, so they either spend a lot of business expenses (throw a bunch of parties), or they pay it out to the docs, and it'll get taxed to the docs.

123
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Re: Can I deduct a loss for non-paying patients?

Post by 123 » Sun May 26, 2019 8:18 pm

You may be able to deduct losses if you switch to accrual accounting instead of cash accounting. Under accrual accounting you would recognize all revenue when you earn it (perform the service) and then recognize losses when they are written off as uncollectable. So there is an option that allows a write-off for non-paying patients, however you have to recognize the expected revenue gained from performing the service before you are allowed a write-off.
The closest helping hand is at the end of your own arm.

Tachyon
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Re: Can I deduct a loss for non-paying patients?

Post by Tachyon » Sun May 26, 2019 8:22 pm

financial.freedom wrote:
Sun May 26, 2019 7:25 pm
Ruger wrote:
Sun May 26, 2019 6:23 pm
I had the same issue before I retired, and the accountants answer was always "no".
Thank you for the reply. I'm read the IRS guidelines and a little confusing. Before you retired, did you try to minimize your time at such facilities? I work at a few locations, and maybe the best strategy is to try and minimize the time I spend working at the hospital with mostly Medical and Medicare patients.
Us hospital based workers (I'm ER), it's all about contract and payor mix. If the payor mix is bad, will need a stipend/reimbursement from the hospital. Otherwise get to a better hospital/area with better payor mix. Granted, those hospitals are probably full of physicians there already.

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financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Sun May 26, 2019 8:31 pm

tioscrooge wrote:
Sun May 26, 2019 7:55 pm
A friend of mine is an a ER physician and in a large group of 50 plus providers group. He said that his group is organized as a not for profit organization even though it is an eat what you kill practice . They Call all denied and non collected money as charity care that allows them to call themselves not for profit. I don’t know what other advantages they have as a physician group organized as not-for-profit.
Interesting, will look into this. Thanks!

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financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Sun May 26, 2019 8:33 pm

Tachyon wrote:
Sun May 26, 2019 8:07 pm
No, cannot deduct as losses. I looked into this awhile ago. Don't feel like trying to find exactly where.
In a sense, it's already a deduction because you didn't get the income. In accrual based accounting, Let's say you see a patient a accounted $500 as revenue and $500 for accounts receivable. They never paid. In THAT case, you would deduct $500 as bad debt against your $500 revenue. But most physicians don't do accrual accounting. So in essence, you didn't get paid for it, you don't get it as a deduction.

Furthermore, such deductions would lead to rampant abuse: "I'm worth $10,000 per patient, but only collected $1,000, so I can deduct $9,000".

You have an additional issue. Somewhere in your contract with the hospital is for your to see any / all patients they require you to see. So for you, it's not bad debt, it's a contractual obligation that you agreed to.
For Medical and Medicare the rates are already negotiated, reduced rates. So wouldn't be able to inflate the numbers. I'll read more about accrual based accounting. Thanks!

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financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Sun May 26, 2019 8:36 pm

Tachyon wrote:
Sun May 26, 2019 8:10 pm
tioscrooge wrote:
Sun May 26, 2019 7:55 pm
A friend of mine is an a ER physician and in a large group of 50 plus providers group. He said that his group is organized as a not for profit organization even though it is an eat what you kill practice . They Call all denied and non collected money as charity care that allows them to call themselves not for profit. I don’t know what other advantages they have as a physician group organized as not-for-profit.
I don't see how this would make the physicians any more money. They would still get individual income tax on anything they individually earn. Anything at the entity level is an expense anyways. And the Net Income would need to be 0 at the end of the year in not-for-profit, so they either spend a lot of business expenses (throw a bunch of parties), or they pay it out to the docs, and it'll get taxed to the docs.
If I set up a group for the low-reimbursing hospital and separate it from the other hospitals, the balance could be below zero (if able to claim losses for denied payments etc.).

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financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Sun May 26, 2019 8:37 pm

123 wrote:
Sun May 26, 2019 8:18 pm
You may be able to deduct losses if you switch to accrual accounting instead of cash accounting. Under accrual accounting you would recognize all revenue when you earn it (perform the service) and then recognize losses when they are written off as uncollectable. So there is an option that allows a write-off for non-paying patients, however you have to recognize the expected revenue gained from performing the service before you are allowed a write-off.
Thanks for the reply! I'll have to read more about accrual accounting.

toofache32
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Re: Can I deduct a loss for non-paying patients?

Post by toofache32 » Sun May 26, 2019 9:50 pm

runner3081 wrote:
Sun May 26, 2019 7:00 pm
fru-gal wrote:
Sun May 26, 2019 6:28 pm
financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
He is saying that Medicare pays very little for the services provided to their members (commercial payers make up the difference for low Medicare payments), not that they don't pay.
No, he IS saying that Medicare (and ALL insurances) don't always pay. They play a "gotcha" game and require you to code things a certain way, but they will not tell you how they want it. And they change their preferences routinely without notification. The general public thinks it's just send them a bill with a code on it...how difficult could it be? But it's way more complex than that.

For example, for a bilateral procedure, some insurance companies want you to bill the same code twice with a -LT and a -RT modifier to denote bilateral services. Others want you to only list the code once, but append a -50 modifier for bilateral procedures. This changes from year to year as new plans are brought to the market, and this is just one small example.

toofache32
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Re: Can I deduct a loss for non-paying patients?

Post by toofache32 » Sun May 26, 2019 9:54 pm

financial.freedom wrote:
Sun May 26, 2019 8:33 pm
Tachyon wrote:
Sun May 26, 2019 8:07 pm
No, cannot deduct as losses. I looked into this awhile ago. Don't feel like trying to find exactly where.
In a sense, it's already a deduction because you didn't get the income. In accrual based accounting, Let's say you see a patient a accounted $500 as revenue and $500 for accounts receivable. They never paid. In THAT case, you would deduct $500 as bad debt against your $500 revenue. But most physicians don't do accrual accounting. So in essence, you didn't get paid for it, you don't get it as a deduction.

Furthermore, such deductions would lead to rampant abuse: "I'm worth $10,000 per patient, but only collected $1,000, so I can deduct $9,000".

You have an additional issue. Somewhere in your contract with the hospital is for your to see any / all patients they require you to see. So for you, it's not bad debt, it's a contractual obligation that you agreed to.
For Medical and Medicare the rates are already negotiated, reduced rates. So wouldn't be able to inflate the numbers. I'll read more about accrual based accounting. Thanks!
What makes you think there was a "negotiation?" Can you tell us when this "negotiation" took place? And who was involved in this "negotiation?" I asked Medicare to negotiate their fees with my practice and I was told the fees are take it or leave it. Therefore I am not in-network with Medicare. Insurance contracts are "contracts of adhesion". https://www.upcounsel.com/contract-of-adhesion

fru-gal
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Re: Can I deduct a loss for non-paying patients?

Post by fru-gal » Mon May 27, 2019 5:33 am

financial.freedom wrote:
Sun May 26, 2019 7:13 pm
fru-gal wrote:
Sun May 26, 2019 6:28 pm
financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
Yes, I encounter it every single day, many times a day. One example: Have you ever had a preoperative chest X-ray? Denied

But I don't want this to be a political or medical discussion -- I just want to know whether or not it can be deducted.
I've had tons of imaging while on Medicare, not just xrays but mris, catscans. None of them have ever been denied. I am wondering if the place is engaging in non-standard medical procedures,

fru-gal
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Re: Can I deduct a loss for non-paying patients?

Post by fru-gal » Mon May 27, 2019 5:36 am

toofache32 wrote:
Sun May 26, 2019 9:50 pm
runner3081 wrote:
Sun May 26, 2019 7:00 pm
fru-gal wrote:
Sun May 26, 2019 6:28 pm
financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
He is saying that Medicare pays very little for the services provided to their members (commercial payers make up the difference for low Medicare payments), not that they don't pay.
No, he IS saying that Medicare (and ALL insurances) don't always pay. They play a "gotcha" game and require you to code things a certain way, but they will not tell you how they want it. And they change their preferences routinely without notification. The general public thinks it's just send them a bill with a code on it...how difficult could it be? But it's way more complex than that.

For example, for a bilateral procedure, some insurance companies want you to bill the same code twice with a -LT and a -RT modifier to denote bilateral services. Others want you to only list the code once, but append a -50 modifier for bilateral procedures. This changes from year to year as new plans are brought to the market, and this is just one small example.
So what you're saying is claims are denied because the billing/coding department is incompetent.

3-20Characters
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Re: Can I deduct a loss for non-paying patients?

Post by 3-20Characters » Mon May 27, 2019 5:49 am

gasdoc wrote:
Sun May 26, 2019 7:22 pm
Bfwolf wrote:
Sun May 26, 2019 7:17 pm
You've already gotten the deduction: you never received the income and therefore won't be taxed on it.
Yup. That's it. Well put.

gasdoc
+2. You didn’t pay tax on income you never received. You’ve deducted your biz expenses from any income you did receive. Any further deduction is double dipping.

toofache32
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Re: Can I deduct a loss for non-paying patients?

Post by toofache32 » Mon May 27, 2019 6:51 am

fru-gal wrote:
Mon May 27, 2019 5:36 am
toofache32 wrote:
Sun May 26, 2019 9:50 pm
runner3081 wrote:
Sun May 26, 2019 7:00 pm
fru-gal wrote:
Sun May 26, 2019 6:28 pm
financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
He is saying that Medicare pays very little for the services provided to their members (commercial payers make up the difference for low Medicare payments), not that they don't pay.
No, he IS saying that Medicare (and ALL insurances) don't always pay. They play a "gotcha" game and require you to code things a certain way, but they will not tell you how they want it. And they change their preferences routinely without notification. The general public thinks it's just send them a bill with a code on it...how difficult could it be? But it's way more complex than that.

For example, for a bilateral procedure, some insurance companies want you to bill the same code twice with a -LT and a -RT modifier to denote bilateral services. Others want you to only list the code once, but append a -50 modifier for bilateral procedures. This changes from year to year as new plans are brought to the market, and this is just one small example.
So what you're saying is claims are denied because the billing/coding department is incompetent.
It has nothing to do with competence. The coding "rules" lack transparency, change frequently, and are different for every plan. Insurance companies repeatedly say they never received claims, even though they are filed electronically. 14% of claims nationwide are denied the first time, often for no obvious reason. They rely on the hassle factor knowing many of the claims for small amounts won't be appealed because it costs more than the claim is worth for the hospital/doctor to pay staff to re-submit. Insurance companies use sophisticated "denial engines" made by Ingenix (owned by United Healthcare) to run literally millions of edits to deny claims.

http://www.prleap.com/pr/114522/healthc ... ial-engine

bberris
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Re: Can I deduct a loss for non-paying patients?

Post by bberris » Mon May 27, 2019 7:06 am

tioscrooge wrote:
Sun May 26, 2019 7:55 pm
A friend of mine is an a ER physician and in a large group of 50 plus providers group. He said that his group is organized as a not for profit organization even though it is an eat what you kill practice . They Call all denied and non collected money as charity care that allows them to call themselves not for profit. I don’t know what other advantages they have as a physician group organized as not-for-profit.
Being non-profit means the corporation/entity is not taxed on their retained earnings (what would be called profit if it was not a non-profit). Take home pay by the employees is regular taxable earnings.

obgraham
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Re: Can I deduct a loss for non-paying patients?

Post by obgraham » Mon May 27, 2019 1:53 pm

Boy, I'd be a wealthy fellow if I had been able to deduct uncompensated care I provided over the years! I suspect most other docs would, too.

I don't agree with the criticism that it would be "double dipping" though. I can deduct charitable donations. I can deduct the costs I incur in donating a product or a service (like mileage). I see nothing unethical about deducting donated services -- they have a real value.

Unfortunately, the IRS does not agree with me -- you can't do it!

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gilgamesh
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Re: Can I deduct a loss for non-paying patients?

Post by gilgamesh » Mon May 27, 2019 6:36 pm

3-20Characters wrote:
Mon May 27, 2019 5:49 am
gasdoc wrote:
Sun May 26, 2019 7:22 pm
Bfwolf wrote:
Sun May 26, 2019 7:17 pm
You've already gotten the deduction: you never received the income and therefore won't be taxed on it.
Yup. That's it. Well put.

gasdoc
+2. You didn’t pay tax on income you never received. You’ve deducted your biz expenses from any income you did receive. Any further deduction is double dipping.
I don’t have a horse on this race, but wonder whether this “double dipping” argument is really true.

Are you saying nothing was lost with non-paid medical procedures? It sounds to me like something is lost. I understand, overhead like rent, staff wages etc incurred during the unpaid procedure is deducted from other income, but overall there is still loss in not getting paid for the procedure and also even the paid procedures are effectively paid less because they incurred increased overhead (because overhead on unpaid procedures is tacked on to them). Basically, it’s like working for 60 hrs/wk and getting paid for 40, and why would any system that devices a way to minimize that impact be ‘double dipping’?

So, there is definitely Services rendered that is not compensated. If there is a system in place to compensate for that, I don’t see how that system will be double dipping. There were no initial dipping.

I think if this is an issue, then OP should find a place to work where this isn’t a major issue. I understand it may not be practical, but that seems to be the only legal way.

toofache32
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Re: Can I deduct a loss for non-paying patients?

Post by toofache32 » Mon May 27, 2019 7:18 pm

gilgamesh wrote:
Mon May 27, 2019 6:36 pm
3-20Characters wrote:
Mon May 27, 2019 5:49 am
gasdoc wrote:
Sun May 26, 2019 7:22 pm
Bfwolf wrote:
Sun May 26, 2019 7:17 pm
You've already gotten the deduction: you never received the income and therefore won't be taxed on it.
Yup. That's it. Well put.

gasdoc
+2. You didn’t pay tax on income you never received. You’ve deducted your biz expenses from any income you did receive. Any further deduction is double dipping.
I don’t have a horse on this race, but wonder whether this “double dipping” argument is really true.

Are you saying nothing was lost with non-paid medical procedures? It sounds to me like something is lost. I understand, overhead like rent, staff wages etc incurred during the unpaid procedure is deducted from other income, but overall there is still loss in not getting paid for the procedure and also even the paid procedures are effectively paid less because they incurred increased overhead (because overhead on unpaid procedures is tacked on to them). Basically, it’s like working for 60 hrs/wk and getting paid for 40, and why would any system that devices a way to minimize that impact be ‘double dipping’?

So, there is definitely Services rendered that is not compensated. If there is a system in place to compensate for that, I don’t see how that system will be double dipping. There were no initial dipping.

I think if this is an issue, then OP should find a place to work where this isn’t a major issue. I understand it may not be practical, but that seems to be the only legal way.
This is true. My understanding of this issue is that equipment/supplies can be deducted but time/services cannot. Since the doctor starting this thread is an employee, the employER is likely taking those deductions since they are the ones buying equipment.

I looked at this once in my practice as I was weeding out insurance companies to drop. Medicare/Medicaid were the obvious first to get rid of. I kept thinking that we wouldn't even need Medicaid/Medicare if doctors and hospitals were allowed to deduct charity cases where the payments don't cover the costs.

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Artsdoctor
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Re: Can I deduct a loss for non-paying patients?

Post by Artsdoctor » Mon May 27, 2019 8:16 pm

financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
No, you cannot deduct any losses. Perhaps you're describing patients who have Medicare with a Medicaid secondary. You'll collect the Medicare allowable and Medicaid will not pay the remaining 20%. You can't balance bill the patient and you can't right off any non-payment. If there is no secondary, then you can definitely bill the patient for the 20%.

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gilgamesh
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Re: Can I deduct a loss for non-paying patients?

Post by gilgamesh » Mon May 27, 2019 8:23 pm

toofache32 wrote:
Mon May 27, 2019 7:18 pm
gilgamesh wrote:
Mon May 27, 2019 6:36 pm
3-20Characters wrote:
Mon May 27, 2019 5:49 am
gasdoc wrote:
Sun May 26, 2019 7:22 pm
Bfwolf wrote:
Sun May 26, 2019 7:17 pm
You've already gotten the deduction: you never received the income and therefore won't be taxed on it.
Yup. That's it. Well put.

gasdoc
+2. You didn’t pay tax on income you never received. You’ve deducted your biz expenses from any income you did receive. Any further deduction is double dipping.
I don’t have a horse on this race, but wonder whether this “double dipping” argument is really true.

Are you saying nothing was lost with non-paid medical procedures? It sounds to me like something is lost. I understand, overhead like rent, staff wages etc incurred during the unpaid procedure is deducted from other income, but overall there is still loss in not getting paid for the procedure and also even the paid procedures are effectively paid less because they incurred increased overhead (because overhead on unpaid procedures is tacked on to them). Basically, it’s like working for 60 hrs/wk and getting paid for 40, and why would any system that devices a way to minimize that impact be ‘double dipping’?

So, there is definitely Services rendered that is not compensated. If there is a system in place to compensate for that, I don’t see how that system will be double dipping. There were no initial dipping.

I think if this is an issue, then OP should find a place to work where this isn’t a major issue. I understand it may not be practical, but that seems to be the only legal way.
This is true. My understanding of this issue is that equipment/supplies can be deducted but time/services cannot. Since the doctor starting this thread is an employee, the employER is likely taking those deductions since they are the ones buying equipment.

I looked at this once in my practice as I was weeding out insurance companies to drop. Medicare/Medicaid were the obvious first to get rid of. I kept thinking that we wouldn't even need Medicaid/Medicare if doctors and hospitals were allowed to deduct charity cases where the payments don't cover the costs.
That’s a very interesting proposition...I guess (just thinking out loud here), if the taxes owed on non-Medicaid/Medicare procedures equals Medicaid/Medicare procedures billed at full fee then this would be neutral. But, I wonder whether this will be true - if a hospital is heavy on Medicaid/Medicare they may not have enough other taxable income to fully offset the income loss. However, if certain parts of money already spent on Medicare/Medicaid is still pumped into the system, that is an interesting alternative.

Any data on taxes paid by health care to amounts billed for Medicare/Medicaid? That ought to be a good start.

P.S: Good point about the employee doctor...

Xrayman69
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Re: Can I deduct a loss for non-paying patients?

Post by Xrayman69 » Mon May 27, 2019 9:29 pm

Bfwolf wrote:
Sun May 26, 2019 7:17 pm
You've already gotten the deduction: you never received the income and therefore won't be taxed on it.
However, time and effort was used and therefore opportunity to be paid for a service that could have been performed. In addition the risk if something may arise from the service that was “already deducted” because no payment was made.

In actuality it is a negative cost.

The “legitimate” service can not be taken back by the physician and in fact has ongoing risk of lawsuit for the next 7+ years. I suspect the service that was provided was not intended as charity to begin with and thus not intended to be “already deducted”

If a store has items “stolen” by shoplifter does the store write it off? Or is it “already gotten written off” because they don’t have to pay taxes on the profit or did the store actually have a deficit due to expenses set forth in advance to make that item available. Furthermore if the store actually sells an item for a loss do they get to deduct the difference?

Unfortunately health care is caught between a rock and a hard place. It’s generally not a market driven business for health care providers, unless the provider does not participate in Medicare and therefore can refuse to see Medicare patients.

uberdoc
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Re: Can I deduct a loss for non-paying patients?

Post by uberdoc » Mon May 27, 2019 9:52 pm

You can’t deduct the loss. Please stop working independently. It is just not feasible anymore. Get employed and get a good salary. Let hospital, insurance, government etc deal among each other. I sometimes take surgery calls in mostly Medicare/Medicaid population and get paid on hourly basis from the hospital. If I have to collect myself, I will not cover emergency things.

spectec
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Re: Can I deduct a loss for non-paying patients?

Post by spectec » Mon May 27, 2019 9:58 pm

Xrayman69 wrote:
Mon May 27, 2019 9:29 pm
Bfwolf wrote:
Sun May 26, 2019 7:17 pm
You've already gotten the deduction: you never received the income and therefore won't be taxed on it.
However, time and effort was used and therefore opportunity to be paid for a service that could have been performed. In addition the risk if something may arise from the service that was “already deducted” because no payment was made.You can't take a deduction for opportunity cost.

In actuality it is a negative cost.

The “legitimate” service can not be taken back by the physician and in fact has ongoing risk of lawsuit for the next 7+ years. I suspect the service that was provided was not intended as charity to begin with and thus not intended to be “already deducted”
This problem isn't unique to the medical profession. Everyone who provides services on credit has this same issue, whether they be accountants, lawyers, auto mechanics, flea market vendors, etc.

If a store has items “stolen” by shoplifter does the store write it off? Or is it “already gotten written off” because they don’t have to pay taxes on the profit or did the store actually have a deficit due to expenses set forth in advance to make that item available. Furthermore if the store actually sells an item for a loss do they get to deduct the difference?
The store doesn't get a separate write off for stolen product. Their shrinkage in inventory automatically writes off the actual cost of the item stolen. Same is true if they sell something at a loss. They report the selling price in gross receipts and then their net inventory change, adjusted for actual purchases, deducts the cost of the item. A stolen item follows the same process, except it has a selling price of zero. Stolen product and product sold at a loss simply reduce gross profit on sales

Unfortunately health care is caught between a rock and a hard place. It’s generally not a market driven business for health care providers, unless the provider does not participate in Medicare and therefore can refuse to see Medicare patients.Agreed
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

toofache32
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Re: Can I deduct a loss for non-paying patients?

Post by toofache32 » Mon May 27, 2019 10:05 pm

spectec wrote:
Mon May 27, 2019 9:58 pm
If a store has items “stolen” by shoplifter does the store write it off? Or is it “already gotten written off” because they don’t have to pay taxes on the profit or did the store actually have a deficit due to expenses set forth in advance to make that item available. Furthermore if the store actually sells an item for a loss do they get to deduct the difference?
The store doesn't get a separate write off for stolen product. Their shrinkage in inventory automatically writes off the actual cost of the item stolen. Same is true if they sell something at a loss. They report the selling price in gross receipts and then their net inventory change, adjusted for actual purchases, deducts the cost of the item. A stolen item follows the same process, except it has a selling price of zero
But the cashier isn't risking their license and working extra hours for thieves uncompensated. The doctor is the cashier that is only paid if the customer pays.

uberdoc
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Re: Can I deduct a loss for non-paying patients?

Post by uberdoc » Mon May 27, 2019 10:09 pm

And don’t get into any argument with anyone about these things. No one cares. Especially, don’t get into changing how medicine works. Focus on yourself and your income, protect yourself and plan to retire soon. Always remember- patients, lawyers, hospital, insurance, government, nurses and other doctors- no one is your friend.

toofache32
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Re: Can I deduct a loss for non-paying patients?

Post by toofache32 » Mon May 27, 2019 10:11 pm

uberdoc wrote:
Mon May 27, 2019 9:52 pm
You can’t deduct the loss. Please stop working independently. It is just not feasible anymore. Get employed and get a good salary. Let hospital, insurance, government etc deal among each other. I sometimes take surgery calls in mostly Medicare/Medicaid population and get paid on hourly basis from the hospital. If I have to collect myself, I will not cover emergency things.
This doctor IS salaried. Not all hospitals pay for taking call. About 4 years ago my group approached our secondary hospital to ask for pay to be on call since call is an uncompensated burden....we cannot leave town, we cannot drink, cannot go out to dinner with our family, etc. The CEO said "we have 59 specialties and only 7 are paid to take call." I responded "well you are about to have only 58 specialties." They wouldn't pay. So we refused further call. My phone number is still on the walls at the nursing station so I still get calls to see patients. I merely tell them I am respectfully declining the consult since I have no way of being paid. But I am happy to accept the transfer to my other hospital that pays us for our services and time.

Topic Author
financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Tue May 28, 2019 10:38 am

fru-gal wrote:
Mon May 27, 2019 5:33 am
financial.freedom wrote:
Sun May 26, 2019 7:13 pm
fru-gal wrote:
Sun May 26, 2019 6:28 pm
financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
Yes, I encounter it every single day, many times a day. One example: Have you ever had a preoperative chest X-ray? Denied

But I don't want this to be a political or medical discussion -- I just want to know whether or not it can be deducted.
I've had tons of imaging while on Medicare, not just xrays but mris, catscans. None of them have ever been denied. I am wondering if the place is engaging in non-standard medical procedures,
Just trust me, the professional fee for the physician reading your studies is often denied.

Topic Author
financial.freedom
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Re: Can I deduct a loss for non-paying patients?

Post by financial.freedom » Tue May 28, 2019 10:41 am

fru-gal wrote:
Mon May 27, 2019 5:36 am
toofache32 wrote:
Sun May 26, 2019 9:50 pm
runner3081 wrote:
Sun May 26, 2019 7:00 pm
fru-gal wrote:
Sun May 26, 2019 6:28 pm
financial.freedom wrote:
Sun May 26, 2019 6:09 pm
One of the hospitals I work at has a pretty bad payer mix -- I'm told the physicians only collect 30% from billing because a lot of patients are Medical (Medicaid) and Medicare that denies the charges. Am I able to deduct these as losses?
Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
He is saying that Medicare pays very little for the services provided to their members (commercial payers make up the difference for low Medicare payments), not that they don't pay.
No, he IS saying that Medicare (and ALL insurances) don't always pay. They play a "gotcha" game and require you to code things a certain way, but they will not tell you how they want it. And they change their preferences routinely without notification. The general public thinks it's just send them a bill with a code on it...how difficult could it be? But it's way more complex than that.

For example, for a bilateral procedure, some insurance companies want you to bill the same code twice with a -LT and a -RT modifier to denote bilateral services. Others want you to only list the code once, but append a -50 modifier for bilateral procedures. This changes from year to year as new plans are brought to the market, and this is just one small example.
So what you're saying is claims are denied because the billing/coding department is incompetent.
No, insurance companies are refusing to pay the professional fee to the physician. I’m not referring to the technical component the hospital collects for imaging studies.

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gilgamesh
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Re: Can I deduct a loss for non-paying patients?

Post by gilgamesh » Tue May 28, 2019 2:08 pm

financial.freedom wrote:
Tue May 28, 2019 10:41 am
fru-gal wrote:
Mon May 27, 2019 5:36 am
toofache32 wrote:
Sun May 26, 2019 9:50 pm
runner3081 wrote:
Sun May 26, 2019 7:00 pm
fru-gal wrote:
Sun May 26, 2019 6:28 pm


Are you saying Medicare denies legitimate charges? I am on Medicare and have never encountered such a thing.
He is saying that Medicare pays very little for the services provided to their members (commercial payers make up the difference for low Medicare payments), not that they don't pay.
No, he IS saying that Medicare (and ALL insurances) don't always pay. They play a "gotcha" game and require you to code things a certain way, but they will not tell you how they want it. And they change their preferences routinely without notification. The general public thinks it's just send them a bill with a code on it...how difficult could it be? But it's way more complex than that.

For example, for a bilateral procedure, some insurance companies want you to bill the same code twice with a -LT and a -RT modifier to denote bilateral services. Others want you to only list the code once, but append a -50 modifier for bilateral procedures. This changes from year to year as new plans are brought to the market, and this is just one small example.
So what you're saying is claims are denied because the billing/coding department is incompetent.
No, insurance companies are refusing to pay the professional fee to the physician. I’m not referring to the technical component the hospital collects for imaging studies.
Is there separate billing codes for taking the x-ray vs reading it? Could it be that it’s bundled together and it’s the hospital that’s not paying you?

Bir48die
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Re: Can I deduct a loss for non-paying patients?

Post by Bir48die » Tue May 28, 2019 2:41 pm

Hey, I get the frustration with Medicare and billing. Just know that those of us either close to or nearing Medicae are scared shi*less by being denied by a physician who doesn't think they're being adequately compensated. Just sayin'

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dm200
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Re: Can I deduct a loss for non-paying patients?

Post by dm200 » Tue May 28, 2019 3:37 pm

Bfwolf wrote:
Sun May 26, 2019 7:17 pm
You've already gotten the deduction: you never received the income and therefore won't be taxed on it.
Yes -

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dm200
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Re: Can I deduct a loss for non-paying patients?

Post by dm200 » Tue May 28, 2019 3:42 pm

Bir48die wrote:
Tue May 28, 2019 2:41 pm
Hey, I get the frustration with Medicare and billing. Just know that those of us either close to or nearing Medicae are scared shi*less by being denied by a physician who doesn't think they're being adequately compensated. Just sayin'
In my opinion and experience, a benefit of being on a Medicare Advantage (MA) plan is that the participating physicians agree and accept the compensation they receive for your care. While not all such physicians are accepting new MA patients, the MA plan makes a commitment to have sufficient physicians who will accept new patients.

In this area, it is very common that Primary Care Physicians do not accept new Medicare patients - although they will continue to see existing patients when they go on Medicare.

toofache32
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Re: Can I deduct a loss for non-paying patients?

Post by toofache32 » Tue May 28, 2019 4:32 pm

gilgamesh wrote:
Tue May 28, 2019 2:08 pm
financial.freedom wrote:
Tue May 28, 2019 10:41 am
fru-gal wrote:
Mon May 27, 2019 5:36 am
toofache32 wrote:
Sun May 26, 2019 9:50 pm
runner3081 wrote:
Sun May 26, 2019 7:00 pm

He is saying that Medicare pays very little for the services provided to their members (commercial payers make up the difference for low Medicare payments), not that they don't pay.
No, he IS saying that Medicare (and ALL insurances) don't always pay. They play a "gotcha" game and require you to code things a certain way, but they will not tell you how they want it. And they change their preferences routinely without notification. The general public thinks it's just send them a bill with a code on it...how difficult could it be? But it's way more complex than that.

For example, for a bilateral procedure, some insurance companies want you to bill the same code twice with a -LT and a -RT modifier to denote bilateral services. Others want you to only list the code once, but append a -50 modifier for bilateral procedures. This changes from year to year as new plans are brought to the market, and this is just one small example.
So what you're saying is claims are denied because the billing/coding department is incompetent.
No, insurance companies are refusing to pay the professional fee to the physician. I’m not referring to the technical component the hospital collects for imaging studies.
Is there separate billing codes for taking the x-ray vs reading it? Could it be that it’s bundled together and it’s the hospital that’s not paying you?
Yes, taking the xray is called the "techinical component" and is intended to reimburse the hospital, imaging center, or whoever bought the xray machine. Then there is the "professional component" which is to pay the radiologist to interpret the images and provide a report. I don't think these are bundled normally but I could be wrong.

jacoavlu
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Re: Can I deduct a loss for non-paying patients?

Post by jacoavlu » Tue May 28, 2019 10:08 pm

OP if you’re not getting paid then you need to look at factors you control. Documentation, billing, coding. Especially if the technical component is being paid while the pro fee is denied.

“Preop” is not an indication for a chest X-ray. “Preop intracranial hemorrhage” is. “Preop total hip arthroplasty and COPD” is. You get what I’m saying. Tell the techs to get a better history if needed. Make them call ordering providers. People will be annoyed but eventually things will get better. Refuse exams without a proper indication.

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Rob5TCP
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Re: Can I deduct a loss for non-paying patients?

Post by Rob5TCP » Wed May 29, 2019 11:36 am

financial.freedom wrote:
Sun May 26, 2019 8:37 pm
123 wrote:
Sun May 26, 2019 8:18 pm
You may be able to deduct losses if you switch to accrual accounting instead of cash accounting. Under accrual accounting you would recognize all revenue when you earn it (perform the service) and then recognize losses when they are written off as uncollectable. So there is an option that allows a write-off for non-paying patients, however you have to recognize the expected revenue gained from performing the service before you are allowed a write-off.
Thanks for the reply! I'll have to read more about accrual accounting.
For your type of practice you don't want accrual basis accounting.
Do you really want to have to pay taxes on billings that you have not received payment for?
That is accrual. As soon as you bill, it's income and come tax time you have to pay.
On cash basis, you are only taxed on cash that you have RECEIVED (not just billed).

Under accrual, you might have billings at the end of the year that you pay tax on
and don't write off until the following year. Yes, you get to write it off the next year
but ONLY because you paid taxes on it for the prior year.

Check with whitecoatinvestor; but I believe most medical practices are cashed based
accounting not accrual.

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dm200
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Re: Can I deduct a loss for non-paying patients?

Post by dm200 » Wed May 29, 2019 12:22 pm

Rob5TCP wrote:
Wed May 29, 2019 11:36 am
financial.freedom wrote:
Sun May 26, 2019 8:37 pm
123 wrote:
Sun May 26, 2019 8:18 pm
You may be able to deduct losses if you switch to accrual accounting instead of cash accounting. Under accrual accounting you would recognize all revenue when you earn it (perform the service) and then recognize losses when they are written off as uncollectable. So there is an option that allows a write-off for non-paying patients, however you have to recognize the expected revenue gained from performing the service before you are allowed a write-off.
Thanks for the reply! I'll have to read more about accrual accounting.
For your type of practice you don't want accrual basis accounting.
Do you really want to have to pay taxes on billings that you have not received payment for?
That is accrual. As soon as you bill, it's income and come tax time you have to pay.
On cash basis, you are only taxed on cash that you have RECEIVED (not just billed).
Under accrual, you might have billings at the end of the year that you pay tax on
and don't write off until the following year. Yes, you get to write it off the next year
but ONLY because you paid taxes on it for the prior year.

Check with whitecoatinvestor; but I believe most medical practices are cashed based
accounting not accrual.
I suggest consulting a CPA or accountant about cash basis or accrual basis accounting for your type of practice.

MichCPA
Posts: 602
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Re: Can I deduct a loss for non-paying patients?

Post by MichCPA » Wed May 29, 2019 12:34 pm

123 wrote:
Sun May 26, 2019 8:18 pm
You may be able to deduct losses if you switch to accrual accounting instead of cash accounting. Under accrual accounting you would recognize all revenue when you earn it (perform the service) and then recognize losses when they are written off as uncollectable. So there is an option that allows a write-off for non-paying patients, however you have to recognize the expected revenue gained from performing the service before you are allowed a write-off.
Not that simple, if you have a client base like this, US GAAP would tell you to not recognize income unless you are more likely than not to collect it.

For tax purposes, you typically can't claim bad debt expense unless you previously reported it as revenue. (See Topic 453). No reason to switch accounting methods to pay more now and get a deduction later.

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