The IRS recently clarified that personal protective equipment like face masks, hand sanitizer, and disinfecting wipes can now be deducted as medical expenses—and the tax break applies to health savings accounts, as well. Here’s what you need to know to claim the tax break.
How to qualify
You can claim expenses for yourself, your spouse (if you’re filing jointly), and dependents—but only for purchases made after Jan. 1, 2020. There are two ways to make the claim:
- As part of an itemized tax return: PPE spending can now be lumped in with other qualified medical expenses, which are tax deductible once they exceed 7.5% of your adjusted gross income (e.g., if you made $100,000, you can deduct additional spending beyond the first $7,500). Expenses already reimbursed through an insurance claim won’t be eligible, however.
- As a qualified purchase made with funds from a tax-free account: PPE can now be purchased with funds from FSA, HSA, Archer MSA, and HRA healthcare spending accounts (for an overview of qualified expenses, check out this Lifehacker post). Also note that COVID-relief legislation allows employers to rollover 2020 healthcare spending accounts for up to 12 months, so confirm your plan’s policy with your employer to see if you have extra time to make qualifying purchases.
For more information on determining what’s deductible as a medical expense, use this calculator tool provided by the IRS (it takes about 15 minutes to complete). For more details on what counts as a qualified expense for a tax-free account, click here .
You still have some time to file
As both taxpayers and the IRS have struggled to keep up with all of the changes from COVID-relief legislation, the IRS has extended the tax filing deadline for the 2020 tax year from April 15 to May 17, 2021. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest, and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Most states have followed suit and extended their deadlines, as well.