This episode focuses on the tax treatments of disaster relief payments under IRC Section 139 and Tuition assistance under IRC Section 127. Both of these sections of the law have been in existence for a number of years and are valuable planning tools for businesses.
Original broadcast date was June, 2020
Podcast is approximately 15.53 minutes
Code Section 139 – The fundamental concept of Code Section 139 is that employees have incurred additional expenses as a result of a national emergency (cost of working from home, utility cost increase, upgrade of computer, child care, additional meal expenses, etc). Under this code section, business owners can give employees a tax-free payment (deductible to the business) as a result of them being displaced from routine due to the pandemic. The employer only needs a sense of the additional cost incurred and provide up to that amount in a fully deductible allowance that is not subject to taxation upon receipt by the affected employee.
Code Section 127 – Under the CARES Act all payments by a business, for qualified student loan interest or principle (on amounts up to $5,250), will be a tax deductible payment to the benefit of the employee with no tax consequences to the employee. Only applicable until December 31, 2020 and a written plan document is required.
This webinar applies to all business owners/executives who have received disaster relief payments.