After the devastation that was wrought by Hurricanes Harvey, Irma, and Maria, the Internal Revenue Service (IRS) immediately declared a postponement of tax filing dates for those people and businesses in affected counties.
Additionally, the U.S. Congress fast-tracked a bill proposed by Kevin Brady, a Republican from Texas, that would provide more tax relief for people living in the devastated areas.
How tax deadlines will work
If you live in an affected area, the IRS will give you extra time to file your taxes or pay estimated tax payments, whether that be personal or business income taxes. Review the IRS declarations here to see which dates apply to you:
- Victims of Hurricane Harvey in Texas
- Florida Hurricane Victims
- Victims of Hurricane Maria in Puerto Rico
The Disaster Tax Relief and Airport and Airway Extension Act of 2017
On September 22, 2017, Brady proposed a hurricane relief bill to help provide some tax breaks for victims of the three hurricanes that slammed into U.S. states and territories. Just one week later, President Donald Trump signed the bill into law.
“My bill specifically helps hurricane victims keep more of their paycheck, deduct more of the cost of their expensive property damage, and have more affordable and immediate access to money they have saved for their retirement,” wrote Brady in a statement upon releasing the bill.
Here’s a breakdown of the relief affected citizens will receive:
Deduction for personal casualty losses:
- Taxpayers do not need to satisfy the requirement that personal casualty losses must exceed 10% of adjusted gross income to qualify.
- Taxpayers do not need to itemize their deductions to qualify for this relief.
Access to retirement funds:
- Taxpayers will not be subject to the early-distribution tax penalty (10%) on qualified hurricane relief distributions.
- Taxpayers who took withdrawals for home purchases that were canceled due to the disaster can re-contribute their funds.
- Retirement plan administrators will offer flexibility for loans from retirement plans for eligible hurricane relief.
- There will be no limitations on the deduction for charitable contributions associated with hurricane relief until December 31, 2017.
- Disaster-affected employers will receive a tax credit for 40% of wages paid to an employee from a core disaster area, up to $6,000 per employee.
Personal tax credits
- For the Earned Income Tax Credit and the Child Tax Credit, taxpayers may refer to income from the previous tax year to determine their eligibility for the credits this year.
As you’re looking to take advantage of these tax relief measures, be sure to use a reputable tax preparer that can help you navigate any questions you might have along the way.