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COVID treatment and prevention expenses are deductible

As COVID continues to be a problem around the globe with no quick end in sight, tax related questions have arisen and IRS continues to release guidance on the deductibility of expenses related to COVID treatment and prevention.

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Most recently, as the availability of home testing kits have become more available, the IRS reminds taxpayers that the cost of home testing for COVID-19 is an eligible medical expense that can be paid or reimbursed under health flexible spending arrangements (health FSAs), health savings accounts (HSAs), health reimbursement arrangements (HRAs) or Archer medical savings accounts (Archer MSAs).

Earlier this year, the IRS issued an announcement 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. Such expenses are also eligible to be paid or reimbursed under the same health spending programs as mentioned above.

Remember that only unreimbursed expenses count as tax deductible. So, if you were reimbursed for expenses you originally paid by your insurance company, you must reduce the total amount of your deduction by the amount reimbursed. Also remember that total medical expenses must exceed 7.5% of your “adjusted gross income (AGI)” before they are of any tax benefit. However, there are some state, including Arizona, that allow the expenses without regard to the 7.5% AGI floor. So stay safe and keep track of those expenses!

For more information and on the tax side of COVID treatment and prevention, see our coronavirus page. Feel free to contact your Henry+Horne tax adviser with any questions or concerns.

Dale F. Jensen, CPA

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