This article is an overview of the IRS’s recent tax relief measures for individuals and businesses impacted by Hurricane Helene.
In response to the devastation caused by Hurricane Helene, the IRS has announced special tax relief measures for individuals and businesses affected by the disaster.
This relief applies to parts or all of seven states: Alabama, Georgia, North Carolina, South Carolina, Florida, Tennessee, and Virginia.
Here’s a comprehensive overview of the available tax relief:
Postponement of Tax Deadlines
The IRS has postponed various federal tax filing deadlines, allowing affected taxpayers additional time to file tax returns and pay taxes.
For qualifying taxpayers, the IRS has extended deadlines to May 1, 2025.
The tax returns and tax payments eligible for postponement are:
- 2024 Tax Returns Due in Early 2025: Any individual or business with a 2024 federal tax return due in March or April 2025 now has until May 1, 2025, to file. This includes tax returns for individuals, businesses, and tax-exempt organizations.
- Extended 2023 Tax Returns: An individual or business that has extended its 2023 tax return now has until May 1, 2025 to file its return. However, late payments related to these returns will not automatically qualify for penalty relief as they were due prior to Hurricane Helene making landfall.
- Quarterly Estimated Tax Payments: If you are required to make quarterly estimated tax payments, the payments originally due on January 15, 2025, and April 15, 2025, have also been extended to May 1, 2025.
- Payroll and Excise Tax Returns: For businesses that need to file payroll or excise tax returns, deadlines for quarterly filings due on October 31, 2024, January 31, 2025, and April 30, 2025, have been postponed to May 1, 2025. In addition, the IRS is offering penalty relief (varies by state) for businesses unable to make timely payroll and excise tax deposits.
Automatic Relief
One of the most helpful aspects of this Helene tax relief is that it is automatic. If your IRS address of record is located in the disaster area, you don’t need to apply or contact the IRS to receive the extended deadlines and penalty relief. The IRS will automatically adjust your account to reflect the new deadlines.
Taxpayers Outside the Disaster Area
However, for those who may have moved to the disaster area after filing their tax return, or for individuals or businesses whose records are located in the disaster area but live outside of it, will likely need to contact the IRS to request penalty relief.
Additionally, workers assisting in relief efforts, whether affiliated with the government or philanthropic organizations, may qualify for relief as well.
Claiming Disaster Losses
For individuals and businesses who have suffered uninsured or unreimbursed losses due to Hurricane Helene, the IRS offers another form of tax relief: the ability to claim those losses on either your 2024 tax return or your 2023 return. This option allows affected taxpayers to potentially benefit from a quicker tax refund by claiming the loss sooner.
When claiming disaster losses, you must write the FEMA disaster declaration number on your tax return. Taxpayers who need more information about claiming losses should consult Publication 547, which provides detailed guidance on how to handle casualty losses, disasters, and thefts for tax purposes.
Exclusion of Disaster Relief Payments from Gross Income
Qualified disaster relief payments made to individuals affected by Hurricane Helene are generally not included in gross income for tax purposes. This exclusion applies to payments for personal, family, living, or funeral expenses, as well as for the repair or rehabilitation of a home and its contents. These payments must come from a government agency, such as FEMA.
Retirement Plan and IRA Relief
For taxpayers with retirement plans or IRAs, special relief provisions apply. For example, the IRS is allowing special disaster distributions from retirement plans that won’t be subject to the usual 10% early withdrawal penalty. Although the distribution may still be subject to income tax, taxpayers can spread the income from these distributions over three years for tax purposes, providing some relief from the immediate financial burden of having to pay the related taxes all at once.
Additionally, some taxpayers may qualify for hardship withdrawals from their retirement plans. Each retirement plan or IRA has its own set of rules and procedures for handling such withdrawals, so it’s essential to check with your plan administrator for specific guidance.
Conclusion
The IRS’s comprehensive tax relief for Hurricane Helene victims offers a lifeline for individuals and businesses dealing with the storm’s aftermath. With extended deadlines, the option to claim disaster losses, and penalty relief, the measures are designed to ease the financial strain caused by the hurricane.
Stay turned for additional updated and in-depth guidance related to Helene Tax Relief. Feel free to reach out to me with any additional questions.