September 2018

Congress & IRS Offer Help to Hurricane & Wildfire Victims

September 15, 2018 | By: Robert A. Green, CPA

Follow latest IRS updates on hurricanes and wildfire tax relief:

IRS extends upcoming deadlines, provides tax relief for victims of Hurricane Florence

Sept. 15, 2018: WASHINGTON — Hurricane Florence victims in parts of North Carolina and elsewhere have until Jan. 31, 2019, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today. (See IR-2018-187.)

This relief applies to 2017 partnership and S-Corp tax returns, and 2018 third-quarter estimated taxes due September 17, 2018.

Retirement plans can make loans, hardship distributions to wildfire, Hurricane Maria victims.

Nov. 1, 2017, Thomson Reuters Checkpoint: “In an Announcement, IRS has announced that employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Maria and the California wildfires and members of their families. And, while IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures. But, IRS is not waiving the 10% penalty that applies to early withdrawals. Ann. 2017-15, 2017-47 IRB.”

Tax Relief for Victims of California Wildfires: Extension Filers Have Until Jan. 31 to File

Oct. 17, 2017, Thomson Reuters Checkpoint: “The IRS has provided tax relief for the victims of wildfires affecting parts of California. Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma, and Yuba. The tax relief postpones various tax filing and payment deadlines that occur starting on 10/8/17. Affected individuals and businesses now have until 1/31/18 to file returns and pay any taxes that are originally due during the relief period. This includes quarterly estimated tax payments, extended 2016 income tax returns, and quarterly payroll and excise tax returns. The IRS noted that tax payments related to 2016 individual tax returns were originally due on 4/18/17, and therefore, not eligible for this relief. The relief is automatically available to any taxpayer with an IRS address of record located in the disaster area. Therefore, the taxpayer does not need to contact the IRS to get this relief. Firefighters and aid workers assisting in the relief efforts that are affiliated with a recognized organization and live outside the disaster area also may qualify for the relief by contacting the IRS. News Release IR 2017-172.”

Oct. 13, 2017: Per IRS.gov, “Victims of wildfires ravaging parts of California now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments. This includes an additional filing extension for taxpayers with valid extensions that run out this coming Monday, Oct. 16.”

Tax Provisions in the 2017 Disaster Tax Relief Bill

Per Thomson Reuters CheckPoint: On September 29, President Trump signed into law P.L. 115-63, the “Disaster Tax Relief and Airport and Airway Extension Act of 2017.” The Act, which had been passed by Congress the day before, provides temporary tax relief to victims of Hurricanes Harvey, Irma, and Maria. Businesses that qualify for relief may claim a new “employee retention tax credit” of up to $2,400 for qualified wages paid to eligible employees. Relief for individuals includes, among other things, loosened restrictions for claiming personal casualty losses, tax-favored withdrawals from retirement plans, and the option of using current or prior year’s income for purposes of claiming the earned income and child tax credits. H.R. 3823, the “Disaster Tax Relief and Airport and Airway Extension Act of 2017.”

Relief for casualty losses
The Act exempts qualified disaster-related personal casualty losses from the 10% AGI threshold. Victims don’t have to itemize; they can add this casualty loss to their standard deduction, and that part is deductible for AMT. The Act increases the $100 per-casualty floor to $500. Congress doesn’t want to disenfranchise victims from taking these important tax deductions.

Eased access to retirement funds
The Act allows victims to make “qualified hurricane distributions” from their retirement plans of up to $100,000, with exemption from the 10% early withdrawal penalty. Taxpayers can spread this income over a 3-year period.

Charitable deduction limitations suspended
To help spur more donations to victims, the Act suspends the majority of charitable deduction limitations.

IRS Offers Help to Hurricane Victims: A Recap of Key Tax Relief Provisions Available Following Harvey, Irma and Maria

IR-2017-160, Sept. 26, 2017

WASHINGTON – The Internal Revenue Service today offered a rundown of key tax relief that has been made available to victims of Hurricanes Harvey, Irma and Maria.

In general, the IRS is now providing relief to individuals and businesses anywhere in Florida, Georgia, Puerto Rico and the Virgin Islands, as well as parts of Texas. Because this relief postpones various tax deadlines, individuals and businesses will have until Jan. 31, 2018 to file any returns and pay any taxes due…(Read more.)


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