Getting rid of student loans with pre-tax dollars??

[LADoc00]

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Has anyone figured out a scheme to do this?? Ive been pondering lots of ideas including starting a business that buys the debt from Sallie Mae, offshore trusts as well as lending systems between friends and family, but Im sure some enterprising residents/young MDs out there have found a way.

Anyone care to share?

Also, looking at tax reduction strategies, does anyone know if uncompensated food in the hospital setting is tax deductible?

 

[Orange Julius]

Has anyone figured out a scheme to do this?? Ive been pondering lots of ideas including starting a business that buys the debt from Sallie Mae,

Sallie Mae would only do that for two reasons. 1) for a huge profit, which wouldn't be very helpful or 2) if they were going under and needed to liquidise assets. That's not very likely since they're one of the most risk-free and profitable companies on the market

as well as lending systems between friends and family, but Im sure some enterprising residents/young MDs out there have found a way.

That would work. Your family could pay off the loan and then you could pay them pack interest free. Unfortunately, if most students had families able or willing to do that, they wouldn't have needed student loans in the first place.

Also, looking at tax reduction strategies, does anyone know if uncompensated food in the hospital setting is tax deductible?

There was a thread about this recently. Try searching "tax burden".

 

[LADoc00]

Sallie Mae would only do that for two reasons. 1) for a huge profit, which wouldn't be very helpful or 2) if they were going under and needed to liquidise assets. That's not very likely since they're one of the most risk-free and profitable companies on the market

No, my idea was to form a medical company which pays off the Sallie Mae consolidation, then slowly forgives this debt over time, allowing one to bleed a significant chunk of their income pre-tax. Each dollar here would be like paying 2 dollars in loans back with post-tax dollars🙂

Another idea I had was to donate the money to a charity I set up that pays off the debt of young MDs, basically my own...kinda like a homemade version of working in an underserved area, except my underserved area is my practice. This might be complicated and I know a group of docs in San Diego got popped for this a few years back, but there must be a tax work around.

My idea is take medical corporate cash to offset my loans, I know biz types do this all the time, but wonder if anyone here has set this up recently.

 

[proman]

How about having your medical practice pay the monthly payments to Sallie Mae, then write the cost off as a business expense? I'd ask a tax attorney. As for the meals, you can't deduct the cost of meals that you would have eaten anyway. IRS publication 529 http://www.irs.gov/pub/irs-pdf/p529.pdf explains what is and isn't allowable misc. deduction.

 

[Orange Julius]

No, my idea was to form a medical company which pays off the Sallie Mae consolidation, then slowly forgives this debt over time, allowing one to bleed a significant chunk of their income pre-tax. Each dollar here would be like paying 2 dollars in loans back with post-tax dollars🙂

Well at least you're thinking creatively about your finances. The fact that you're thinking about them at all puts you ahead of the majority of young doctors. The problem with this idea is that you'd need to have capital to start with. There is no concievable way for you to come up with a profit forecasting business plan for this enterprise, and whithout one, no one's going to lend you money.

Another idea I had was to donate the money to a charity I set up that pays off the debt of young MDs, basically my own...kinda like a homemade version of working in an underserved area, except my underserved area is my practice. This might be complicated and I know a group of docs in San Diego got popped for this a few years back, but there must be a tax work around.

Another nice idea. But the IRS simply won't accept this kind of scheme as a "charity". They're more likely to classify it as "tax fraud".

My idea is take medical corporate cash to offset my loans, I know biz types do this all the time, but wonder if anyone here has set this up recently.

Unfortunately, corporate types tend not to be eager to give their cash away. There's no way to convince anyone that you intend to make money by borrowing at market rates in order to pay off low interest loans. It's not even theoretically possible to make a dime that way.

 

[Orange Julius]

How about having your medical practice pay the monthly payments to Sallie Mae, then write the cost off as a business expense?

Some people do have their loans paid by their post-residency employer. That would be great. In that case you wouldn't need to worry about the problem. Generally when a company does pay student debt, they don't pay monthly payments. They simply pay off the loan. I don't know if they pay tax on it.

But if you're talking about having your practice pay the loan payments on the books while you pay them back under the table, that won't work for two reasons. First, they can't claim it as a tax write-off if the loan is still in your name. Also, they'd be taking a big chance (as this is highly ileagal) and if audited would be heavily fined.

 

[LADoc00]

OJ, thanks for the advice. I think Im not be clear here tho. I have the cash. In fact I am my own corp., review my billings and read my EOBs from my cases. What I want to do is structure my business to pay literally all my expenses pre-tax: housing, car, food, health insurance, entertainment, 401K contribution as well as student loans. I know people do this all the time, but the accountants and lawyers I have seem to be less than "creative" about how to do all this and make it legal.

For example, I was considering making a portion of my business to involve property venture capital and using pre-tax to buy land, build a custom home etc etc...everyone thinks Im crazy because Im a doc and should just focus on that, but it can be hard with old Uncle Same ramming me in the ass.

 

[Orange Julius]

OJ, thanks for the advice. I think Im not be clear here tho. I have the cash. In fact I am my own corp., review my billings and read my EOBs from my cases. What I want to do is structure my business to pay literally all my expenses pre-tax: housing, car, food, health insurance, entertainment, 401K contribution as well as student loans. I know people do this all the time, but the accountants and lawyers I have seem to be less than "creative" about how to do all this and make it legal.

For example, I was considering making a portion of my business to involve property venture capital and using pre-tax to buy land, build a custom home etc etc...everyone thinks Im crazy because Im a doc and should just focus on that, but it can be hard with old Uncle Same ramming me in the ass.

Incorporating or forming your own trust is a good idea if you have a considerable amount of wealth tied up in appreciating or income producing assets That's a fairly good way of sheltering your capital gains and income from taxes. You could then pay yourself a pre-tax salary (if you must) and deduct business expences. That's a very sensible thing to do if you have a sizeable investment portfolio. It's something I plan on doing later on down the road.

Unfortunately that won't help you with your student loans as they can't be classified as a business expense of your fledgling corporation. Nor is there any way that I know of to transfer ownership of your student loans to a corporation. Sallie mae simply won't let you do that.

If you have the money to pay off your loans, why not just invest that money in an investment that yields a higher percentage than you pay for your student loans. That way when eventually you pay off your loan, you can pocket, or reinvest the difference.

BTW interest on your student loans (up to a max cut off per year) is tax deductable.

 

[Orange Julius]

OJ, thanks for the advice. I think Im not be clear here tho. I have the cash. In fact I am my own corp., review my billings and read my EOBs from my cases. What I want to do is structure my business to pay literally all my expenses pre-tax: housing, car, food, health insurance, entertainment, 401K contribution as well as student loans.

Also, just to point out, owning your own practice gives you certain tax advantages. Having an investment trust or corp. also gives you advantages (mainly that the corporate tax bracket is lower than an individual one). But you would always want to keep those two entities separate for liabiltiy limitation purposes.

Also, you can't simply claim everything you spend as a business expense of either your corporation or medical practice. The IRS would be sort of pissed if you tried to do that. There are fairly strict regulations governing what can and can't be claimed.

 

[LADoc00]

BTW interest on your student loans (up to a max cut off per year) is tax deductable.

Not if you make over 70K a year Im afraid. If you can make 200K a year and still deduct student loan interest I would LOVE to know it. I got into a fight over this with my tax man (who claimed I couldnt deduct it) a few months ago.

 

[Orange Julius]

Not if you make over 70K a year Im afraid. If you can make 200K a year and still deduct student loan interest I would LOVE to know it. I got into a fight over this with my tax man (who claimed I couldnt deduct it) a few months ago.

You might want to post that question at www.helpthedoctor.com. It's a new forum geared toward practicing physicians. This forum is basically for residents, few of whom earn more than $70,000.

I doubt that you'd be able to get around the income cap for interest deductability but good luck trying.

 

[PainDr]

What I want to do is structure my business to pay literally all my expenses pre-tax: housing, car, food, health insurance, entertainment, 401K contribution as well as student loans. I know people do this all the time, but the accountants and lawyers I have seem to be less than "creative" about how to do all this and make it legal.

I'm sure if you were "creative" you could find accountants and attorneys willing to help you engage in this type of fraudulent activity, however, I'm fairly certain there's no way to "make" it legal. If you're sooooo eager to get out of paying YOUR taxes, why not just move to some tax haven and open a practice? 😡

If you're REALLY interested in making some cash, you should consider commodities futures! 😉

 

[LADoc00]

I'm sure if you were "creative" you could find accountants and attorneys willing to help you engage in this type of fraudulent activity, however, I'm fairly certain there's no way to "make" it legal. If you're sooooo eager to get out of paying YOUR taxes, why not just move to some tax haven and open a practice? 😡

I have no problem paying a fair share, its when I get bent over I start having a problem...and I have looked into tax haven practices actually. Figuring a year in a place like the Kingdom of Saud is roughly equivalent to 5 years or so in the US...that would spell retirement at a very young age. Regardless...

I hate the utter cluelessness on this site sometimes....there are corporations that made profits in the hundreds of millions of $$ and paid zero, yes zero taxes (!!) last year and someone is griefing me about student loan write offs. Amusing to say the least.

I can say for one I will never be bent by the system, I hope you wont be either.

 

[PainDr]

A person can convince themselves of just about anything if they are so inclined. Obviously, you've convinced yourself that you're a "victim" of Uncle Sam...while still taking home six figures. Lets just call this what it is, greed, pure and simple.

I hate the utter cluelessness on this site sometimes....there are corporations that made profits in the hundreds of millions of $$ and paid zero, yes zero taxes (!!) last year and someone is griefing me about student loan write offs. Amusing to say the least.

You're ready to engage in criminal behavior and you expect people to condone that?!?!? Having worked as a stock/bond broker for several years, I would hardly consider myself clueless. I do know a little bit about corporate finance and taxation. Perhaps if YOU knew a little more about how the system works, you wouldn't feel so victimized.

 

[Sebastian.]

I'm sure if you were "creative" you could find accountants and attorneys willing to help you engage in this type of fraudulent activity, however, I'm fairly certain there's no way to "make" it legal. If you're sooooo eager to get out of paying YOUR taxes, why not just move to some tax haven and open a practice? 😡

Minimizing your tax burden is never a bad idea. Of course you don't want to do anything illegal. But looking for loopholes is smart.

If you're REALLY interested in making some cash, you should consider commodities futures! 😉

Eh, with no experience that would be a really bad idea. Commodities futures are about as advanced as investments (or in this case gambling, maybe) can get.

 

[Dr. V]

A person can convince themselves of just about anything if they are so inclined. Obviously, you've convinced yourself that you're a "victim" of Uncle Sam...while still taking home six figures. Lets just call this what it is, greed, pure and simple.

No greed is when you think it's OK to charge people a higher percentage because they make more. It's just plain greedy to expect some people to pay nothing, others to pay 15% and still others 28%. The "Soak the Rich" tax structure is 100% greed. You should not be punnished for working harder, the only fair taxation is a flat tax. 10% is 10% whether you make 1000 or 100,000. That way everybody pays their "fair share".

Keeping what you EARN is not greed, that's not wanting to work your butt off to support people that refuse to support themselves. 😱

 

[LADoc00]

No greed is when you think it's OK to charge people a higher percentage because they make more. It's just plain greedy to expect some people to pay nothing, others to pay 15% and still others 28%. The "Soak the Rich" tax structure is 100% greed. You should not be punnished for working harder, the only fair taxation is a flat tax. 10% is 10% whether you make 1000 or 100,000. That way everybody pays their "fair share".

Keeping what you EARN is not greed, that's not wanting to work your butt off to support people that refuse to support themselves. 😱

No, to many on the political left, greed is when you want to buy a house for your family and not fully contribute to the local homeless shelter, welfare program or any number of societal causes which they feel should absolutely trump your own sense of fulfillment and happiness. Ironically, many of those lefties are also stinking rich too, maybe this is a case of Dr. Pain wanting to be rich, while leaving the rest of us groveling for his scraps.

Not I, Im comin and Im going to blow the house in🙂

 

[Leo I]

Not I, Im comin and Im going to blow the house in🙂

 

[Dunce]

No greed is when you think it's OK to charge people a higher percentage because they make more. It's just plain greedy to expect some people to pay nothing, others to pay 15% and still others 28%. The "Soak the Rich" tax structure is 100% greed. You should not be punnished for working harder, the only fair taxation is a flat tax. 10% is 10% whether you make 1000 or 100,000. That way everybody pays their "fair share".

Keeping what you EARN is not greed, that's not wanting to work your butt off to support people that refuse to support themselves. 😱

pure common sense.
thank you for the voice of reason

 

[PainDr]

To many on the political left, greed is when you want to buy a house for your family and not fully contribute to the local homeless shelter, welfare program or any number of societal causes which they feel should absolutely trump your own sense of fulfillment and happiness. Ironically, many of those lefties are also stinking rich too, maybe this is a case of Dr. Pain wanting to be rich, while leaving the rest of us groveling for his scraps.

This could not be further from the truth. If you knew me, you'd know I have always been a capitalist (spent 6 years on Wall Street) and now that I'm about to finish fellowship, plan to invest in the best legal/tax advise money can buy. There's nothing wrong with using the system to maximize your income, but I don't think the government should subsidize my custom home, exotic car, food, entertainment, etc., and I certainly draw the line at illegal activity. BTW, I happen to think a flat tax is actually a good idea, however, it will never happen because the truly wealthy don't want it! Think about why that might be. 🙄