A Tampa pediatric PT practice with $1.4M revenue had zero proactive tax strategy. Three well-known IRS-recognized approaches, Augusta Rule, HRA, and defined benefit pension, saved $54K annually.
01The Situation
The founding therapist had grown the practice from a solo clinic to a five-therapist operation. Revenue was strong. She paid significant taxes every year without complaint, she assumed it was simply the cost of running a profitable healthcare practice.
She came to us not because something was wrong, but because a colleague was paying $40K less annually on a similar income. The colleague had implemented specific strategies. The founding therapist had implemented none.
02What We Did
The Augusta Rule election allowed the practice to rent the owner's home for 14 staff meetings per year at fair market rates ($1,000/day). The rent is a deductible business expense; the owner receives up to 14 days of rent tax-free under IRC Section 280A. Annual deduction: $14,000.
The HRA was structured to reimburse the owner's qualified medical expenses on a pre-tax basis, $18,600 in annual reimbursements. The defined benefit pension allowed a $66,000 deductible annual contribution. Combined annual tax saving: $54,380.
03Client Impact
None of the three strategies were aggressive or obscure, they were well-established, IRS-recognized approaches simply never applied to her situation. The $54K annual saving is real money in a practice that generates $280K in owner income.
Breakdown
| Strategy | Annual Benefit | How It Works | Risk Level | Status |
|---|---|---|---|---|
| Augusta Rule Home Rental | $14,000 deduction | Practice rents owner home for 14 business meetings/yr | Low | Implemented |
| Health Reimbursement Arrangement | $5,580 saved | HRA covers $18,600 owner medical costs pre-tax | Low | Implemented |
| Defined Benefit Pension | $21,780 saved | $66K deductible contribution | Low | Implemented |
| TOTAL | $54,380/yr | Three combined strategies | Low overall | All implemented |
What changed
Augusta Rule Implemented
14 qualifying business meetings held at owner home. $14K deduction. IRS-compliant rental arrangement.
HRA Implemented
$18,600 in medical expenses reimbursed pre-tax. $5,580 annual tax saving. Plan document filed.
Defined Benefit Pension, $21,780 Saving
$66K deductible contribution made before tax deadline. First time retirement savings formalized.
Combined Saving: $54K
Effective rate: 34.2% → 21.8%. All three strategies low-risk and fully documented.
None of the three strategies were aggressive or obscure, they were well-established, IRS-recognized approaches simply never applied to her situation. The $54K annual saving is real money in a practice that generates $280K in owner income.
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