Line items

PPE is deductible as a medical expense

The IRS said in Announcement 2021-7 that amounts paid for masks, hand sanitizer, sanitizing wipes, and other personal protective equipment (PPE) for use by the taxpayer or the taxpayer’s spouse or dependents primarily to prevent the spread of COVID-19 are treated as paid for medical care under Sec. 213(d). Consequently, such unreimbursed amounts are deductible as an itemized medical expense (to the extent that, along with other allowable medical expenses, they exceed 7.5% of adjusted gross income). Alternatively, they may be paid or reimbursed from health savings accounts, health flexible spending arrangements, health reimbursement arrangements, and Archer medical savings accounts. Group health plans may also be amended to provide for reimbursement of COVID-19 PPE expenses, under conditions outlined in the announcement.

IRS advises on repayments of deferred employer Social Security taxes

The IRS posted COVID Tax Tip 2021-32 on its website in March 2021, advising how employers may make payments of their share of Social Security tax of certain employees that were deferred from Sept. 1, 2020, through Dec. 31, 2020, pursuant to a presidential memorandum. The IRS originally provided in Notice 2020-65 that the deferred taxes must be paid ratably between Jan. 1, 2021, and April 30, 2021. That notice was then modified by the Consolidated Appropriations Act, 2021, P.L. 116-260, in late December 2020 and Notice 2021-11 to extend the payment period through the end of 2021. According to the Tax Tip, employers can make the deferred payments through the Electronic Federal Tax Payment System (EFTPS) or by credit or debit card, money order, or check. These payments should be separated from other tax payments, the IRS said, adding that employers would “soon” be able to select a “deferral payment” designation in EFTPS for that purpose.

Final regs. cover misdirected refunds

In T.D. 9940, the IRS issued final regulations on how to correct tax refunds that are direct deposited into the wrong bank account or otherwise misdirected. The procedures, under Sec. 6402(n), were mandated by the Taxpayer First Act, P.L. 116-25. They include how taxpayers may report misdirected refunds, how the IRS and financial institutions will work together to identify and recover them, and how the refunds are then delivered to the correct taxpayer account. A taxpayer or authorized representative may report to the IRS that the taxpayer never received a direct deposit refund and request a replacement refund under procedures outlined in the regulations. Notably, a misdirected direct deposit refund is defined as one not deposited into the account designated on the claim for refund (excluding any amount credited or offset under the law in effect immediately prior to the direct deposit’s disbursement). Thus, these procedures do not cover errors in designating an account for deposit on the claim for refund.

Where to find April’s flipbook issue

The Journal of Accountancy is now completely digital. 





Get Clients Ready for Tax Season

This comprehensive report looks at the changes to the child tax credit, earned income tax credit, and child and dependent care credit caused by the expiration of provisions in the American Rescue Plan Act; the ability e-file more returns in the Form 1040 series; automobile mileage deductions; the alternative minimum tax; gift tax exemptions; strategies for accelerating or postponing income and deductions; and retirement and estate planning.