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IRS Says PPE Expenses Could be Deductible

A new announcement from the Internal Revenue Service should come as welcome news to front-line health care workers nationwide. Announcement 2021-7 clarifies existing language to assure taxpayers that the purchase of personal protective equipment (PPE) can be deductible.

When items such as masks, hand sanitizer and sanitizing wipes are purchased to prevent the spread of coronavirus, the IRS says the purchase is deductible.

The announcement says money spent on items for the primary purpose of preventing the spread of COVID-19 will be treated as amounts paid for medical care under section 213(d) of the Internal Revenue Code.

This means amounts paid by an individual taxpayer for COVID-19 PPE for use by the taxpayer, the taxpayer’s spouse or the taxpayer’s dependents that aren’t compensated by insurance or other means are deductible under section 213(a) – provided the taxpayer’s total medical expenses exceed 7.5% of their adjusted gross income.

Amounts paid to purchase PPE can also be paid or reimbursed using health flexible spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs) or health savings accounts (HSAs).

The announcement makes it clear, however, that if an amount is paid or reimbursed by any of these spending arrangements, it cannot be deducted under section 213.

Announcement 2021-7 also says some group health plans may not permit reimbursement now, but can be amended under the new terms to provide it without violating the health plans’ qualifications under the law.

Who qualifies for the deduction?

The IRS’ online tool to check qualifications for such a deduction is located on their Can I Deduct My Medical and Dental Expenses? web page, located on the IRS website, IRS.gov. To use this tool, taxpayers will need to have some information handy:

  • Filing status.
  • Type and amount of expenses paid.
  • The year in which the expenses were paid.
  • Their adjusted gross income.
  • If they were reimbursed or if expenses were paid out of a Health Savings Account or an Archer Medical Savings Account.

Other help can be found in Publication 502, Medical and Dental Expenses. Publication 502 covers many common medical expenses but not every possible medical expense. If taxpayers can’t find the expense they are looking for, they should refer to the definition of medical expenses under What Are Medical Expenses.

SourcesFace masks and other personal protective equipment to prevent the spread of COVID-19 are tax deductible; Can I Deduct My Medical and Dental Expenses?; Announcement 2021-7Publication 502 (2020), Medical and Dental Expenses.

Story provided by TaxingSubjects.com