1099 CRNA Institute: Thrive as your own boss-Don't Deduct Disability Insurance Premiums!

Video Transcription

Good afternoon, Ms. Pierce. How are you, Jeremy? I'm good, I'm good. Excited today. Well, this is a good topic. You and I have had this discussion on multiple occasions  in a couple of podcasts too, but I know that you continually talk about this. So why don't you just lay it all out for us? Well, you know, I think it's an important point.  And really this is gonna be the crux of this particular module because so many CRNAs don't understand this. I'm gonna say first, you know, I see a lot of 1099 CRNAs  not wanting to pay for disability insurance.  And my response to that is you've got to insure the goose that laid the golden egg. And we insure everything else. You insure your car.  How much money does your car make for you, Sharon? Nothing, except to get my behind where I'm working to make money. Work, that's right.  And your house, it doesn't make any money for you. But you, you're the goose that laid the golden egg and people don't wanna pay for that. And disability insurance isn't cheap,  especially if you're buying it, you're 1099, you're buying your own policy somewhere. It is a necessary evil. And the reason this slide says what it is, is because, you know,  we wanna deduct everything we possibly can when we own a business, right? Any place that we can deduct, it helps us on our taxes, we pay less taxes.  That's a smart thing to do, right? And that is very true on most things. Disability insurance is a different animal though. Because what happens with disability insurance  is you pay your premium. And if you do not deduct the premium, in other words, you pay your $4,000 a year premium, I do not write it off. And let's say that $4,000 a year premium  gets me a $8,000 a month benefit if I'm disabled. By not deducting that premium, when I become disabled or if I become disabled, that $8,000 a month that I get is tax free.  They're gonna attach you now or later. So you want it to be now when there's less money involved than later when you're getting your premium, if you do.  Exactly, but also think about that. You know, I've had several CRNA clients  who've gone out on disability. I mean, if you really think about that, one, you're not gonna get insured for 100% of what you make. No insurance company is gonna do that for you.  If you deduct the premium and then go back to that same $8,000 a month, that's gonna now be taxable to you. So you're not even gonna get 8,000.  You're gonna get maybe 5,500 instead of the 8,000  at a time when you're used to bringing in 10 or 12,000 a month. Now you're bringing in 5,500 at a time when you really need it the most.  A lot of people, you know, I see this mistake. A lot of people are deducting their disability insurance premiums thinking, you know what, I'm never gonna use this.  You know, I don't even know why I pay it. You know, I'm gonna deduct it and get my deduction. I'm not gonna worry about it. Really, you do need to think through that  because it could be a big deal if you could not go to work one day. And like my simplistic illustration says, you know, yeah, it costs a little more in taxes now,  but God forbid you need this later on, you don't wanna be paying taxes on it then. And not only will you be paying tax for one month, you'll be paying tax the whole time  you're collecting that disability insurance premium. So the whole idea around insurance sharing is to take a little bit now in hopes that if you ever needed it, you get a lot more.  So would you rather pay tax on a little bit or a lot more? Yeah, and get it while you're young.  Get it while you're young, yeah. I mean, again, you know, it's not something that a lot of people think about. You know, even if people are W-2, they never think about this stuff.  And every decade it goes up as you age, but get it while you're young. Yeah, I mean, every time I teach, you know, a class for SRNAs, I let them know about this  because, you know, that's the time to get this stuff  because when you're young, lock in the premium. I know nobody wants to pay for it,  but also understanding, you know, I mean, disability insurance is written by lawyers and there are contracts involved and make sure you understand what you've got  in that disability policy, which is a little beyond the scope of what we're talking about today, but I'm not telling you what to do. I'm telling you to think through it  and make sure whoever you're working with is thinking through it with you. And they educate you on this because it could be a big deal later on.

Video Summary

Ms. Pierce and Jeremy discuss the importance of CRNAs having disability insurance to protect their income in case of disability. They emphasize the need to prioritize insuring oneself as the primary money-maker. By deducting premiums, CRNAs can ensure tax-free benefits if they become disabled. It's crucial to understand the implications of deducting or not deducting premiums on the taxable benefits received during disability. The advice is to secure disability insurance while young to lock in lower premiums and ensure financial stability in case of unforeseen circumstances, urging thorough consideration and understanding of insurance policies for long-term financial security.

Asset Subtitle

Disability insurance premiums for a 1099 independent contractor Certified Registered Nurse Anesthetist (CRNA) are not deductible as a business expense on your tax return. Disability insurance premiums are considered a personal expense and are not directly related to your CRNA business operations.

While disability insurance provides crucial protection for your income in the event you become disabled and unable to work, it is not a deductible business expense like other business-related costs. Let us explain why.

Keywords

CRNAs

disability insurance

income protection

tax-free benefits

insurance policies