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IRS Issues Guidance On Educators Deducting Out-Of-Pocket Expenses For COVID-19 Protective Items
On February 4, 2021, the Internal Revenue Service (IRS) issued Revenue Procedure (Rev. Proc.) 2021-15. Rev. Proc. 2021-15 entitles “eligible educators” to deduct from their 2020 gross income, certain expenses incurred in order to prevent or limit the spread of the virus that causes COVID-19 in their classrooms.
In order to qualify for the deduction, the individual must be an “eligible educator,” which means that the individual is a “kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school” who works at least 900 hours during a school year.
“Eligible educators” may permissibly deduct from their gross income unreimbursed expenses incurred after March 12, 2020, for certain “COVID-19 Protective Items.”
The IRS guidance expressly provides that “eligible educators” may deduct expenses related to the prevention of the spread of COVID-19 in the classroom. The IRS provides the following list of expenses that would qualify for the deduction:
Disinfectant for use against COVID-19;
Tape, paint, or chalk to guide social distancing;
Physical barriers (for example, clear plexiglass);
Air purifiers; and
Other items recommended by the Centers for Disease Control and Prevention (CDC) to be used for the prevention of the spread of COVID-19
In order for an expense to qualify for deduction the expense must satisfy each of the following three conditions: (1) It was not reimbursed (i.e., was an out-of-pocket expense); (2) It was incurred after March 12, 2020; and (3) It was for the purchase of an item that was or will be used for the prevention of the spread of COVID-19 in the classroom.
Limitations on Deductions
In addition to the limitations on the type of expenses that qualify for coverage under the Revenue Procedure, and thus for deduction from “eligible educators’” gross income, the IRS limits the total deduction for covered expenses to $250 for each “eligible educator.” Therefore, two “eligible educators” who file jointly may permissibly deduct up to $500.
While employers are under no legal obligation to inform their employees of this benefit, you and your school may elect to inform your school’s employees of this tax benefit, so that “eligible educators” may maximize their deductions as part of their upcoming 2020 tax filings.