CARES Act Student Loan Re-payment

[pasgasser2]

Anyone in a private practice group setting successfully implement this new CARES act benefit of $5,250 tax-free repayment towards student loans? Our largely physician-only group is brainstorming how to implement and structure this correctly to potentially attract new recruits.

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[thinkorswim]

My group processed it similar to a personal business expense. The $5,250 was deducted from pre-tax gross income and then added back to after-tax net income. The end result is a tax deduction on that amount by lowering taxable gross income.

That said, we have office staff that process such expenses for our payroll and are W2. If you are 1099, then it would be up to the individual (or their accountant) to deduct it on their tax returns.

 

[pasgasser2]

My group processed it similar to a personal business expense. The $5,250 was deducted from pre-tax gross income and then added back to after-tax net income. The end result is a tax deduction on that amount by lowering taxable gross income.

That said, we have office staff that process such expenses for our payroll and are W2. If you are 1099, then it would be up to the individual (or their accountant) to deduct it on their tax returns.

Nice! We are wanting to do the same since we are also a production based group and it would make most sense to just take it out of an individual's production income pre-tax and reimburse the individual as if it were a business expense. Where we are getting hung up is the eligibility requirement of a Section 127 Educational Assistance Plan that states the "the program may not be discriminatory in favor of highly compensated employees". So presumably this means that this benefit also has to be offered and available to our office staff and the handful of CRNA's that are salary based- ultimately if a non-physician were to claim this benefit it may have to be funded from our pooled production income.

Any ideas to set up and structure the Education Assistance Plan to get around this?

For reference: CARES Act Program Expands Scope of Educational Assistance Plans to Include Employer Repayments of Student Loans