Disaster Assistance Payments
To our clients and friends,
As the COVIC-19 pandemic continues, the financial impact of the changes to our workplace, childcare and schools while at first may have been small, have become significant and crippling for some. Many employers are sensitive to the major financial impact this pandemic may have on their employees and are wondering what they can do to help. We have received questions about bonuses, retention pay, paid leave and other types of payments that would constitute taxable income to the employee. We would like for you to be aware of an alternative that allows employers to provide tax-free financial assistance during these difficult times.
Section 139 of the Internal Revenue Code allows disaster assistance payments to current and former employees with expenses caused by a qualified disaster, including the current COVID-19 pandemic. These payments can be used to cover reasonable and necessary personal, family, living or funeral expenses incurred as a result of the pandemic and are 100% tax free to the employee and tax deductible by the employer. Some examples of expenses that can be covered by Section 139 payments include additional childcare or tutoring due to schools being virtual in place of in person, assistance for mortgage payments if a spouse has lost their employment, unreimbursed medical expenses, hand sanitizer and home disinfectant supplies and work from home expenses such as setting up a home office, increased utility expenses and higher internet costs.
If you would like assistance setting up a Section 139 plan for your employees, please contact anyone on the Kimble team. We are here to help you.
Thank you for your continued confidence in us during these times.