Soon after Hurricane Harvey devastated the Gulf Coast of Texas, the IRS gave tax relief to those affected. On September 29, President Trump signed H.R. 3823 into law that gives some additional tax relief to victims of Hurricanes Harvey, Irma, and Maria.
The bill eliminates the current law requirements in the disaster areas that unreimbursed personal casualty losses exceed 10-percent of adjusted gross income to qualify for deduction. This will allow a greater loss to be claimed on affected taxpayer’s income tax returns. For example, if a taxpayer has $200,000 in adjusted gross income for 2017, under current law, their casualty loss would be reduced by $20,000. Under the new law, there are no casualty loss reductions based on adjusted gross income for those affected by Hurricanes Harvey, Irma, and Maria. The bill also eliminates the current law requirement that taxpayers itemize deductions to access this tax relief, and provides an exception to the 10-percent early retirement plan withdrawal penalty for qualified hurricane relief distributions. In addition, if funds are withdrawn from a retirement plan, taxpayer’s can repay the amount distributed within a three-year period.
The bill temporarily suspends the limitations on charitable contributions for contributions made for qualified hurricane relief made before December 31, 2017. The contributions must be made in cash, occur between August 23, 2017 through December 31, 2017, and made to organizations who are providing relief as a result of Hurricanes Harvey, Irma, and Maria.
As laws change and additional tax relief is granted, we are here to keep you updated and assist you with any questions.