The IRS has announced a new tax benefit for individual taxpayers as they continue to incur expenses related to the COVID-19 pandemic.
Announcement 2021-7 notifies taxpayers that expenses for masks, hand sanitizers, sanitizing wipes and other personal protective equipment (PPE) used primarily to prevent the spread of COVID-19 will be treated as amounts paid for medical care under Internal Revenue Code (IRC) §213(d).
This classification makes the PPE eligible to be paid or reimbursed under health Flexible Spending Accounts (health FSAs), Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (Archer MSAs). By claiming eligible PPE expenditure reimbursements under any of these arrangements, these expenditures are paid with pre-tax dollars, which can be a significant savings when considering PPE expenses during 2020 and 2021.
To qualify the PPE must:
- Be for the use of the taxpayer, taxpayer’s spouse or taxpayer’s dependents
- Not be compensated by insurance
- Not be deducted under another section of the IRC
Please contact your Grassi tax advisor or Robert Tobey, Tax Partner, if you have any questions about paying or reimbursing your PPE expenses with these pre-tax funds.
