Fire Relief Info - 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

Thompson, LaMalfa Introduce Bipartisan Bill to Ensure Fire Victims Don’t Pay Taxes on PG&E Court-Ordered Trust Payments

Washington –

Today, Reps. Mike Thompson (CA-05) and Doug LaMalfa (CA-01) introduced bipartisan legislation to ensure that no fire survivors are taxed on the payments they received from the PG&E Fire Victims Trust. Following fires in 2015, 2017, and 2018, PG&E established a court-ordered trust of over $13 billion for survivors of these devastating events.

“I have heard from constituents across our community who are deeply, deeply concerned that they will face a tax burden upon receiving a payout from PG&E,” said Thompson. “This trust was set up to help people get back on their feet and recover after a destructive fire. They should not have to pay taxes on these payouts. I am proud to introduce this bill alongside Rep. LaMalfa to help our constituents receive the money they are owed, and will continue working to ensure survivors have the resources they need to recover from these tragedies.”

“Fire victims have lost homes, belongings, and for some, even their loved ones. We should not ask survivors to pay federal taxes on compensation that they will use to rebuild their lives. And we certainly should not be asking them to pay taxes on […]

By Linkenheimer LLP|2022-04-01T22:47:30+00:00April 1st, 2022|fire, Fire Relief Info, New Tax Laws|0 Comments

California Tax Updates Regarding Wildfire Victims

Update 1:

Wildfire victims in parts of California now have until Jan. 3, 2022, to file certain tax returns and make tax payments. In August 2021, CA granted extensions to individuals and businesses affected by wildfires. They were originally given until Nov. 15, 2021 to complete these tasks. The IRS has now extended that deadline to Jan. 3, 2022. This deadline also applies to the quarterly payroll and tax returns normally due on Aug. 2, 2021, and Nov. 1, 2021. In addition, penalties on payroll tax deposits due on or after July 17, 2021, but before July 29, 2021 will be abated as long as the deposits were made by July 29, 2021.

Update 2:

New rates for California’s cannabis cultivation tax have been posted for 2022.The CA Dept. of Tax and Fee Administration (CDTFA) lists the following: cannabis flower, $10.08 per dry-weight ounce; cannabis leaves, $3.00 per dry-weight ounce; and fresh cannabis plants, $1.41 per ounce. Rates for cannabis cultivation tax are […]

By Linkenheimer LLP|2021-12-02T20:34:10+00:00December 2nd, 2021|filing deadline, fire, Fire Relief Info, tax deadlines|0 Comments

You Can Only Claim a Casualty Loss Tax Deduction in Certain Situations

In recent weeks, some Americans have been victimized by hurricanes, severe storms, flooding, wildfires 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 there are now 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.

More difficult to qualify

For losses incurred through 2025, the TCJA generally eliminates deductions for personal casualty losses, except for losses due to federally declared disasters. For example, during the summer of 2021, there have been presidential declarations of major disasters in parts of Tennessee, New York state, Florida and California after severe storms, flooding and wildfires. So victims in affected areas would be eligible for casualty loss deductions.

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 […]

By Linkenheimer LLP|2021-08-31T21:56:15+00:00August 31st, 2021|casualty loss, deduction, deductions, disaster, Fire Relief Info, tcja|0 Comments