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Face masks and other personal protective equipment to prevent the spread of COVID-19 are tax deductible

3/26/2021

WASHINGTON — The Internal Revenue Service issued Announcement 2021-7 today clarifying that the purchase of personal protective equipment, such as masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of coronavirus are deductible medical expenses.

The amounts paid for personal protective equipment are also eligible to be paid or reimbursed under health flexible spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs), or health savings accounts (HSAs).

IRS Statement - American Rescue Plan Act of 2021

3/13/2021

The IRS is reviewing implementation plans for the newly enacted American Rescue Plan Act of 2021. Additional information about a new round of Economic Impact Payments, the expanded Child Tax Credit, including advance payments of the Child Tax Credit, and other tax provisions will be made available as soon as possible on IRS.gov. The IRS strongly urges taxpayers to not file amended returns related to the new legislative provisions or take other unnecessary steps at this time.

The IRS will provide taxpayers with additional guidance on those provisions that could affect their 2020 tax return, including the retroactive provision that makes the first $10,200 of 2020 unemployment benefits nontaxable. For those who haven't filed yet, the IRS will provide a worksheet for paper filers and work with software industry to update current tax software so that taxpayers can determine how to report their unemployment income on their 2020 tax return. For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes they should not file an amended return at this time, until the IRS issues additional guidance.

Taxation Status of Unemployment Benefits

3/12/2021

The American Rescue Plan Act exempted the first $10,200 of unemployment retroactive to 2020, thus requiring amended returns unless the IRS automatically adjust returns. We must wait for guidance from the government to be issued before software developers can implement it and we can begin processing affected returns.

The state also has measure SB614 SD2 moving quickly that would retroactively exempt unemployment received in 2020 which would also require an amended return. At present, the senate approved it and it is now in the house for review and approval before it can be sent to the governor for signature. If it is signed into law we then would wait for guidance from the government to be issued before software developers can implement it and we can begin processing affected returns.

If any tax is due we highly recommend filing and pay the tax on time to avoid penalties & interest. We can amend the return later to receive a refund, if any, when the guidance is issued and we are able to begin exempting unemployment compensation.

Newsline

Face masks and other personal protective equipment to prevent the spread of COVID-19 are tax deductible

​IRS Statement - American Rescue Plan Act of 2021

Taxation Status of Unemployment Benefits

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IRS Statement - American Rescue Plan Act of 2021