The IRS has extended disaster relief efforts to victims of the recent hurricanes and wildfires affecting the nation. These efforts are primarily focused on tax relief for victims within areas declared a Federal Disaster Zone. The impact of the disaster and tax policy, however, will affect the nation and economy as a whole. To encourage donations to Disaster Relief Funds, the IRS has enacted a special short-term policy you can take advantage of to help those in need while also reducing your tax burden.
Donations to qualified charitable organizations are generally subject to certain thresholds, limits, and other requirements in order to be deducted on your federal tax return. In light of the recent disasters plaguing our nation, the IRS has temporarily suspended these restrictions for all donations made towards relief efforts in the designated disaster areas of hurricanes Harvey, Irma, and Maria. The contributions are not subject to the phase-out of itemized deductions or limited to 50% of adjusted gross income. Every dollar donated is 100% includable on Schedule A, providing a great opportunity for taxpayers who typically don’t get to take full advantage of their charitable contributions. Qualified contributions may be made through December 31, 2017. It’s not too late to advantage of this provision and help those in need!
For those personally affected by hurricanes Harvey, Irma, or Maria, the IRS is allowing taxpayers a penalty-free grace period to file their tax returns after the extended due date of 10/15/2017. Victims living in the federally declared disaster zones are automatically elected to take advantage of this policy and will accrue no late filing or late payment penalties as long as their extended 2016 tax returns are filed by January 31, 2018. Those who do not reside within the disaster zones, but suffered major losses due to the hurricanes, are able to contact the IRS and apply to qualify for this election.
Victims of the recent wildfires that took place beginning on October 8, 2017 in parts of California will also qualify for tax relief from the IRS. Tax filing and payment deadlines that fall between October 8, 2017 and December 31, 2017 are extended until January 31, 2018 for taxpayers who live or have businesses in the declared wildfire disaster areas. These provisions apply to the counties of: Orange, Solano, Butte, Lake, Mendocino, Napa, Nevada, Sonoma, and Yuba. The IRS automatically identifies eligible taxpayers and applies the extended deadline tax relief.
The California Franchise Tax Board follows federal postponement periods for any presidentially declared disasters, automatically extending California state tax filing and payment deadlines for victims as well.
To read more about disaster relief efforts offered by the IRS, visit the IRS News website at https://www.irs.gov/newsroom/tax-relief-in-disaster-situations.
If you have any questions regarding this information please call your L&B professional at 858-558-9200.