Fall Into Tax Savings

Thursday, September 30, 2021


  • Cost of COVID Home Test Reimbursable: We would like to remind clients 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 (FSAs), health savings accounts (HSAs), or health reimbursement arrangements (HRAs). The cost to diagnose COVID-19 is an eligible medical expense for tax purposes. The IRS has also clarified 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 as well.
  • SBA Increases Cap for E.I.D.L to $2 Million: The SBA is increasing the cap for COVID Economic Injury Disaster Loans from $500,000 to $2 million, targeting hard-hit sectors of the economy. The expiration of the PPP, and soon of the Employee Retention Credit, make the EIDL program a great option for small businesses. EIDL funds can be used for normal operating expenses and working capital, including payroll, purchasing equipment, and paying off debt. COVID EIDL funds will now be eligible to prepay commercial debt and make payments on federal business debt. Also, small business owners won’t need to begin COVID EIDL repayment until 2 years after loan origination. The EIDL program expires 12/31/2021.
  • New Safe Harbor for Claiming the ERC: The IRS issued a safe harbor that allows an employer to exclude certain amounts received from other COVID economic relief programs in determining whether it qualifies for the employee retention credit (ERC) based on a decline in gross receipts. The amounts that can be excluded in calculated gross receipts are: 1) Forgiveness of PPP loans; 2) Shuttered Venue Operators Grants; and 3) Restaurant Revitalization Fund grants. The employer must consistently apply this safe harbor for each calendar quarter in which gross receipts for that calendar quarter are relevant to determining eligibility for the ERC.