disaster - Linkenheimer LLP CPAs & Advisors

Federal Disaster Tax Relief Act Enacted

President Biden has signed the Federal Disaster Tax Relief Act (H.R. 5863; P.L. 118-148). As we previously reported here, the bill:

Retroactively excludes from gross income qualified wildfire relief payments paid to individuals as compensation (other than insurance payments) for losses, expenses, or damages for any wildfire declared a federal disaster after December 31, 2014 (§3, H.R. 5863);
Treats disaster relief payments to victims of the East Palestine, Ohio, train derailment as excludable IRC §139(b) payments (§3, H.R. 5863); and
Allows individual victims with a net disaster loss from any taxable year to claim an enhanced personal casualty loss under IRC §165(h) for certain federally declared disasters that occurred after February 24, 2021. (§2, H.R. 5863)

We anticipate that the IRS will issue additional guidance shortly, and we will keep you posted as updates become available.

By Linkenheimer LLP|2024-12-18T16:43:58+00:00December 18th, 2024|disaster, Fire Relief Info, New Tax Laws, News|0 Comments

Tax Relief for California Wildfire Victims Moves Closer to Reality

After years of frustrating delays, wildfire victims in California are on the brink of receiving long-awaited tax relief. The U.S. Senate has unanimously passed the Federal Disaster Tax Relief Act, which exempts settlement payments for victims of utility-sparked wildfires from federal income taxes. The bill now heads to President Joe Biden, who is expected to sign it into law.

What the Federal Disaster Tax Relief Act Does

The new legislation provides key benefits for wildfire survivors, including:

Tax Exemptions: Settlement payments from lawsuits related to utility-caused wildfires will no longer be treated as taxable income.
Casualty Loss Deductions: Affected individuals can deduct losses exceeding $500 without needing to itemize deductions.
Retroactive Relief: The law applies retroactively to payments issued as far back as December 2020.

If you or someone you know has been affected by California wildfires and received a settlement payment, we can help them understand how this new law may impact them. We will continue to monitor and update this story if the President signs it.

By Linkenheimer LLP|2024-12-06T04:27:21+00:00December 6th, 2024|disaster, fire, Fire Relief Info|0 Comments

Tax Relief for American Families and Workers Act of 2024

The House of Representatives recently passed House Bill 7024, known as the Tax Relief for American Families and Workers Act of 2024, with significant bipartisan support. This landmark legislation aims to realign America’s tax code to bolster economic growth, support working-class families, and provide certainty for American businesses in a climate of economic recovery and innovation.

Key provisions of H.R. 7024 include an expansion of the child tax credit, significant support for American innovation through expanded Research & Development (R&D) expensing, and enhanced measures to improve the competitive stance of U.S. businesses internationally. Specifically, the bill proposes to:

Increase access to housing by providing more flexibility on bond financing requirements and increasing state tax credit allocations.
Eliminate the penalty in the child tax credit for families with more than one child, alongside increasing the refund amount and indexing these amounts to inflation starting in 2024.
Offer “time-limited and limited in scope” disaster tax relief for communities affected by recent calamities, including hurricanes and wildfires.
Ends ERC program early on January 31, 2024, adds penalties for certain COVID-ERC promoters and extends statue of limitations to 6 years.
Increases maximum amount for section 179 expensing with a slight raise in expensing limit allowance […]

By Linkenheimer LLP|2024-02-06T18:04:34+00:00February 5th, 2024|disaster, tax credit, taxpayer relief act|0 Comments

Casualty Loss Tax Deductions May Help Disaster Victims in Certain Cases

This year, many Americans have been victimized by wildfires, severe storms, flooding, tornadoes and other disasters. No matter where you live, unexpected disasters may cause damage to your home or personal property. Before the Tax Cuts and Jobs Act (TCJA), eligible casualty loss victims could claim a deduction on their tax returns. But currently, there are restrictions that make these deductions harder to take.

What’s considered a casualty for tax purposes? It’s a sudden, unexpected or unusual event, such as a hurricane, tornado, flood, earthquake, fire, act of vandalism or a terrorist attack.

Many unable to claim a tax break

For losses incurred from 2018 through 2025, the TCJA generally eliminates deductions for personal casualty losses, except for losses due to federally declared disasters.

Note: There’s an exception to the general rule of allowing casualty loss deductions only in federally declared disaster areas. If you have personal casualty gains because your insurance proceeds exceed the tax basis of the damaged or destroyed property, you can deduct personal casualty losses that aren’t due to a federally declared disaster up to the amount of your personal casualty gains.

Claim a refund with a special election

If your casualty loss is […]

By Linkenheimer LLP|2023-10-04T17:51:20+00:00October 4th, 2023|casualty loss, disaster|0 Comments

Important Reminder: California’s Winter Storms Postpones June 15 Payments

The winter storms that hit California in December and January have caused a lot of damage and disruption. As a result, taxpayers affected by these storms qualify for an extension to October 16, 2023 to file individual and business tax returns and make certain tax payments ¹. This includes individuals whose tax returns and payments are due on April 18, 2023 and June 15, 2023¹.

As announced by Governor Newsom earlier in the year, California individuals and businesses impacted by 2022-23 winter storms qualify for an extension to file and pay taxes until October 16, 2023.

This includes:

Individuals whose tax returns and payments are due on April 18, 2023.
Quarterly estimated tax payments due January 17, 2023, March 15, 2023, April 18, 2023, June 15, 2023, and September 15, 2023.
Business entities whose tax returns and payments are normally due on March 15 and April 18.
Pass-through entity (PTE) elective tax payments due on March 15, 2023 and June 15, 2023.

Affected counties:

Following the disaster declaration issued by the Federal Emergency Management Agency, individuals and households affected by severe winter storms, flooding, landslides and mudslides that reside or have a business in Alpine, Amador, Butte, Calaveras, Del Norte, […]

By Linkenheimer LLP|2023-05-24T13:09:47+00:00May 24th, 2023|CA tax, california, disaster, tax deadlines|0 Comments