Hurricane Ian Business: Employers’ assistance to Employees

Internal Revenue Code Section 139 enables employers to pay certain expenses for employees as deductible expenses that the employee or independent contractor will not have to include in income. The employer will be able to deduct and not have to pay employment taxes, workers compensation, unemployment compensation, or pension contributions.

 

A qualified disaster relief payment is any amount paid to or for the benefit of a person to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses resulting from a qualified disaster.

 

In addition, amounts paid to reimburse or pay for reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or the repair or replacement of the contents of a personal residence that is attributable to the disaster will also qualify. This can be a vacation home, but not a home that is rented to someone other than the employee or independent contractor.

 

The above expenses qualify only to the extent that what was paid for is not compensated by insurance or other sources, and amounts received as Section 139 payments cannot be deducted as casualty losses, so there can be no double tax benefit.