Question

deductions

Forum|Forum|5 years ago
March 31, 2021
1 reply
0 views

I am a sole proprietor as a psychotherapist in CA. I take insurance, but the insurance's contracted rate/their fee schedule is less than my going rate for sessions. Can I write-off/deduct the difference between the contracted rate and my going rate on my business taxes for federal and state?

Thank you!

T

ToddL99

No, you cannot claim an expense ("deduction") for amounts you did not receive.

The only way you can claim an expense or a deduction is when you pay for the item in question with after-tax dollars.

When you accept less than your normal billing rate for a service, you are simply offering a discount. Discounts are not "deductible" - you never receive them and do not report them as income.

See Are free services or discounts given to clients tax deductible? for additional discussion on this issue.