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Qualified Disaster Payments to Employees During COVID-19

§139 of the Internal Revenue Code (the “Code and if you ever tried to read it you will know why they call it Code)”) excludes from a taxpayer’s gross income certain payments to individuals to reimburse or pay for expenses related to a qualified disaster. CONVID-19 is considered a Qualified Disaster in all states....

A “qualified disaster relief payment” is defined by §139(b) of the Code to include any amount paid to or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster.  Qualified disaster relief payments do not include qualified wages paid by an employer, even those that are paid when an employee is not providing services.

We interpret these expenses to be things like... the purchase of masks, hand sanitizers, computers so you work online or receive education online and probably many others we have not thought of.  The employer can deduct and pay this to employees with no tax consequences to the employee.

Thank you to Attorney Jon Alper www.AlperLaw.com  for the heads up on this.