Tax Implications of EMR Stimulus

Posted on October 11, 2010 I Written By

John Lynn is the Founder of the blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of and John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

One of the questions that was asked at the AAFP conference I attended was, “Is the EMR stimulus money taxable income?

The short answer is: Yes.

I think the better answer is that it’s a bonus on your Medicare or Medicaid reimbursement, so it will be taxed in the same way that your Medicare reimbursement is taxed. Would Uncle Sam have it any other way?

One person commented that it’s essentially money in and money out and so that means it’s not really taxed. This is mostly true. If you spend $44,000 on an EMR (which you are very likely to do) and you get $44,000 in EMR stimulus money, then that would essentially mean you aren’t paying taxes on the stimulus money.

This calculation of course doesn’t work for someone who already has an EMR, because they’ve already realized the tax benefits of purchasing an EMR in the year(s) that they spent the money on their EMR.

I wonder if the CBO took into account the tax impacts when they estimated how much of the ARRA stimulus money would be spent on EMR….errr…EHR.

Partial Disclaimer: I am not an accountant and I don’t play one on TV. I’m sure a real CPA will be happy to correct anything I might have said incorrectly in the comments.