IRS Tax Relief for Hurricane Victims

The 2017 Atlantic hurricane season has been one of the most active and costly seasons on record. With Harvey, Irma, and Maria sweeping through many areas of the Caribbean and southern United States, there has been more than $180 billion (USD) in damages.

Luckily, IRS tax relief is available to individuals and businesses in Texas, Florida, Georgia, Puerto Rico, and the U.S. Virgin Islands who have been affected by these catastrophic events.

Who Qualifies?

Qualifying individuals must work or live in and qualifying businesses must be located in areas designated by the Federal Emergency Management Agency (FEMA). To check if you are in a FEMA-designated area, visit the disaster relief page on IRS.gov. Currently 46 counties in Texas, all counties in Florida and Georgia, all municipalities in Puerto Rico, and the three main U.S. Virgin Islands are eligible for relief.

What IRS Tax Relief is Available?

Affected taxpayers in qualifying FEMA-designated areas generally have until Jan. 31, 2018, to meet certain federal tax deadlines:

• Individual and corporate tax returns with a valid Oct. 16, 2017 extension
• Quarterly payroll tax returns due Oct. 31, 2017
• Estimated tax payments due Jan. 16, 2018

Tax returns with extensions– not payments – are extended to Jan. 31. Payroll and excise payments usually just get 2 weeks – they are not extended to Jan. 31.

Check the IRS disaster relief page for other postponements that apply for each of the hurricanes.

Additional IRS Tax Relief

Those affected by hurricanes might experience significant economic hardship from loss or damage to their home or personal property, medical bills, and funeral costs. Taxpayers may claim disaster-related casualty losses on an original or amended 2016 return or wait to claim the loss on the 2017 return filed during the 2018 tax season. The IRS announced affected taxpayers can also take advantage of streamlined loan procedures and liberal hardship distribution rules for certain employer-sponsored retirement plans, such as 401(k)s, 403(b)s, and 457 plans.

To qualify for this relief, hardship withdrawals must be made by Jan. 31, 2018. Some family members of affected taxpayers may also be able to take hardship distributions to assist with relief. Hardship withdrawals are taxable and subject to the 10% early distribution penalty.

Remember: Tax penalties and tax still apply. The relief is that a hardship distribution or loan is permitted without the regular administrative restrictions. Even hardship exemptions are subject to tax and penalty.

Further Resources

More information can be found on the disaster relief page on IRS.gov. If you are a qualifying victim and have additional information, consider working directly with an experienced Tax Advisor, find a Block Advisors office near you.