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 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

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

Reviewing Your Disaster Plan In A Tumultuous Year

It’s been a year like no other. The sudden impact of the COVID-19 pandemic in March forced every business owner — ready or not — to execute his or her disaster response plan.

So, how did yours do? Although it may still be a little early to do a complete assessment of what went right and wrong during the crisis, you can take a quick look back right now while the experience is still fresh in your mind.

Get specific

When devising a disaster response plan, brainstorm as many scenarios as possible that could affect your company. What weather-related, environmental and socio-political threats do you face? Obviously, you can now add “pandemic” to the list.

The operative word, however, is “your.” Every company faces distinctive threats related to its industry, size, location(s), and products or services. Identify these as specifically as possible, based on what you’ve learned.

There are some constants for nearly every plan. Seek out alternative suppliers who could fill in for your current ones if necessary. Fortify your IT assets and functionality with enhanced recovery and security capabilities.

Communicate optimally

Another critical factor during and after a crisis is communication, both internal and external. Review whether […]

By Linkenheimer LLP|2020-10-29T22:04:51+00:00October 29th, 2020|disaster, liability, small business|0 Comments