After spending 2020 stockpiling masks, hand sanitizer and sanitizing wipes in response to COVID-19, you can now write these products off, according to the IRS. The news comes in the middle of tax season -- the Internal Revenue Service started processing 2020 federal tax returns on Feb. 12, but the filing deadline has been delayed from April 15 to May 17. While the federal extension applies to all US taxpayers, not every state has changed its due date, so be sure to check on your particular deadline.
Meanwhile, vaccination efforts continue to pick up speed across the country, and President Joe Biden is urging states to maintain or reinstate mask mandates over concerns of another COVID-19 surge. As the pandemic triggered the highest rate of job loss in America since the Great Depression, the new tax deductions could offer much welcome relief -- for some.
"This continues to be a tough time for many people, and the IRS wants to continue to do everything possible to help taxpayers navigate the unusual circumstances related to the pandemic, while also working on important tax administration responsibilities," IRS Commissioner Chuck Rettig said in a statement.
Let's take a look at how this tax break will work and whether it will help you.
What's covered under the new IRS deduction?
In late March 2021, the IRS announced that personal protective equipment like masks, hand sanitizer and sanitizing wipes that were purchased on or after Jan. 1, 2020, "for the sake of preventing the spread of COVID-19," are considered "medical care" products. This means you are now able to add the cost of such items to your medical expenses when filing taxes -- as long as your annual medical costs exceed 7.5% of your adjusted gross income, or AGI.
"For most taxpayers without other major medical expenses, this is a threshold unlikely to be reached, but it could be helpful for households with other medical expenses that put them over that AGI threshold," said Garrett Watson, senior policy analyst at The Tax Foundation.
If your AGI totaled $75,000 in 2020, for example, your medical expenses would have to exceed $5,625 to write off your PPE spending. But that could save some taxpayers quite a bit of money. After all, hand sanitizer sales increased by 600% in 2020 and, as a result, got pretty pricey in some cases.
Can you get PPE reimbursed through health savings and flexible spending accounts?
"The other change that's probably more relevant for many taxpayers is the ability to have PPE reimbursed under health flexible spending arrangements and health savings accounts," Watson said. "This means taxpayers can save on tax related to PPE purchases by getting a reimbursement from these tax-advantaged savings accounts."
PPE items purchased can also be reimbursed under medical savings accounts or health reimbursement arrangements -- even if they were bought by your spouse or dependents.
How to claim this tax break
In order to claim your deductible, you will need to itemize your taxes on Schedule A (Form 1040). And, significantly, the PPE must not have been covered or paid for by insurance or any other type of health plan. You can learn more about deducting other health and dental costs from your tax bill here.
What to do if you already filed your taxes but think you're eligible
If you've already filed your taxes but believe you are eligible for the tax break, you can file an amended return to make a correction or other changes to your return. That noted, it may be worth holding off for now: The IRS is currently reviewing the tax implications of the American Rescue Plan Act of 2021 and is expected to provide additional guidance on its impact on 2020 tax returns. (On a related note: The first $10,200 of 2020 unemployment benefits may be rendered nontaxable. If you received unemployment benefits last year and already filed your 2020 taxes, the IRS recommends that you not file an amended return until it releases more information.)