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I hope this issue of the Tax Reduction Letter finds you and your family in good health. Warmest good wishes at this difficult time from all of us at the Bradford Tax Institute.
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Here’s good news right in the middle of bad times.
Because the COVID-19 pandemic qualifies as a disaster under the law, you can now take advantage of a special tax loophole.
The loophole allows you to make disaster-related payments to your employees and…
- You can deduct these payments
- The payments to your employees are free of income tax, payroll taxes, and the self-employment tax.
We’ll give you full information on how both you and your employees can take advantage of the newly-activated tax loophole when you read my new article titled, Tax Tips: Tax Loophole Allows Tax-Free COVID-19 Payments to Employees.
Three ways our fact-filled article can help you:
- We’ll tell you the kind of payments you can’t make. The law states that you can’t provide cash or property to your employees and treat them as non-taxable gifts. Payments to business entities won’t pass muster either. We’ll cover the whole subject in depth when you read the full article.
- We’ll tell you the kind of payments you can make. With respect to the COVID-19 pandemic, you are entitled to reimburse or pay for the following employee expenses:
- Out-of-pocket medical not covered by health insurance
- Teleworking costs, such as a computer, office equipment, telephone, and supplies
- Funeral costs for an employee or an employee’s family member
- Childcare costs that allow your employees to continue working while their children are home from school. We’ll explain all of this in detail when you read the full article.
- We’ll explain the issue of documentation. Congress realized that taxpayers, living through a pandemic, can’t easily provide detailed documentation of all payments. So they’re substantially off the hook. However, we recommend that you implement a formal, written plan that will stand up to scrutiny. We’ll tell you what you need to include when you read the full article.