In response to Hurricane Helene’s recent devastation and Hurricane Milton’s impending landfall, Wolters Kluwer Tax & Accounting is highlighting tax relief opportunities available to those affected by natural disasters in 2024.
Tax relief options for impacted individuals and businesses could include filing and payment deadline extensions, casualty loss deductions, and penalty-free access to retirement funds.
According to the Federal Emergency Management Agency, there have been around 150 federal disaster declarations so far this year—seven for the states affected by Helene alone. Around 44 states have been affected by federal disaster declarations in 2024, as well as two territories and half a dozen Native American tribes or bands.
Several key tax provisions impacted businesses and individuals should consider include:
IRS filing and payment extensions
The IRS has granted extensions for various tax filing and payment deadlines until May 1, 2025, for taxpayers affected by the Hurricane Helene disaster. This includes those with previous extensions due to Tropical Storm Debbie, who now have additional time due to Hurricane Helene.
The scope of disaster relief encompasses individuals and businesses throughout Alabama, Georgia, North Carolina, and South Carolina, as well as 41 counties in Florida, eight counties in Tennessee, and select areas in Virginia, including six counties and a city.
Eligibility for such relief is automatically provided to taxpayers with an IRS address of record in the affected disaster regions. However, the IRS has also specified procedures to ensure filing and payment relief for other taxpayers who have their records in the disaster area, those who have recently moved into the area, or those with tax clients situated outside the affected zones.
Casualty loss deductions
Taxpayers who experience uninsured or unreimbursed losses due to federal disasters have the opportunity to claim these losses as itemized deductions on their tax returns. They can choose to claim these losses in the year they were incurred (i.e., on their 2024 tax return) or they may elect to claim the losses on their 2023 tax return to potentially expedite access to a tax refund. If their 2023 tax return has already been filed, taxpayers can file an amended return to reflect these deductions.
Qualified retirement funds
Starting in 2024, taxpayers facing federally declared disasters have several options for accessing retirement funds penalty-free if the employer plan decides to add a provision for it.
First, they may make an emergency withdrawal of up to $1,000 from retirement plans without incurring penalties, which is new this year. Additionally, hardship withdrawals are available for those suffering losses from such disasters, allowing them to withdraw funds penalty-free and either spread the tax liabilities over three years or repay the amount within the same period.
Furthermore, qualified disaster relief payments received from government agencies for necessary disaster-related expenses can generally be excluded from taxable income, providing additional relief for those impacted.
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Tags: Benefits, Human Resources, Income Tax, IRS, Payroll, Taxes
