Tax deductions

COVID-related tax deductions to know

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Coping with the physical symptoms of COVID can be hard enough, but living with and recovering from a serious illness like COVID can also have financial repercussions. You may have missed time from work or other obligations and may also have incurred medical bills and other expenses.

Few people are eager to do their taxes, and if you’re still experiencing lingering COVID symptoms, you may be even less excited about this dreaded task than usual. But there may be a silver lining for those who had COVID last year in the form of at least a little tax relief. Some people with COVID may be eligible for various tax deductions and/or credits, depending on their circumstances. Here’s everything you need to know.

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Medical expenses and PPE purchases

Medical expenses must total a certain minimum amount and represent a certain percentage of your income to be deductible. If you don’t normally have enough medical expenses to deduct, COVID-related bills may push you over your 2021 tax return threshold, especially because some items you bought to protect yourself from COVID may also be tax deductible.

“Personal protective equipment (PPE) like hand sanitizer and masks as well as home COVID testing have been added to the list of medical expenses people can deduct,” says Lisa Greene-Lewis, CPA and expert. tax at TurboTax. “However, you must be able to itemize your deductions to claim medical expenses, so your itemized deductions must exceed the standard deduction ($12,550 for single, $25,100 for married spouse). Your medical expenses should also exceed 7.5% of your adjusted gross income, but remember you can deduct things like mileage to the doctor at 16 cents per mile and even travel if you go to see a specialist.

An exception to the minimum requirements: Greene-Lewis notes that “teachers can deduct PPE as part of the teacher deduction up to $250, which is a higher deduction and you don’t need to itemize.”

Brent Lipschultz, Partner, National Tax Group, Personal Wealth Advisor, International Tax at EisnerAmper, points out that PPE expenses can also be paid for or reimbursed through medical savings accounts such as an FSA, HRA or HSA, but PPE costs that are paid through one of these accounts would then not be deductible.

Related: Here’s everything you need to know for maximum refund if you file taxes yourself

COVID-related credits for the self-employed

If you are self-employed or an independent contractor, you may be eligible for tax relief if you were unable to work for a period of time due to COVID. “If you were self-employed and you were sick with COVID or caring for someone who had COVID and had to take time off from work, you can take qualified sick leave and family leave credits. says Greene-Lewis. There is a formula that determines the amount of credit you can take, based on your average daily self-employment income.

Greene-Lewis notes that you may be eligible to take qualified sick leave and family leave credits if you couldn’t work because you personally had COVID or were caring for someone else who did. . “This is also available if your child’s daycare was closed due to COVID and you couldn’t work because you were caring for them,” says Greene-Lewis. “Additionally, it includes the time you were away because you were going to get vaccinated and recovering from side effects of a vaccine.”

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Deductions and credits for people with dependents

If you have a dependent who was sick and had medical bills, this can also help reduce your tax bill. “Remember, if you’re caring for someone who qualifies as a dependent, you may be able to deduct their medical expenses and mileage to get them to the doctor,” Greene-Lewis says. “If you were caring for a relative or friend whom you can claim as a dependant, you may be able to claim the other dependent credit.”

Those with adult dependents should also double-check to make sure they received the stimulus money intended for them. “If you were supporting an adult dependent in 2021 and you did not receive the third stimulus for them, you may be able to claim the recovery refund credit of up to $1,400 for them since the US bailout allowed you to receive the third adult dependent stimulus,” says Greene-Lewis, adding that you should refer to IRS letter 6475, which tells you how much stimulus the person received.

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