Tax Relief For Victims of Hurricane Harvey
Submitted by ADVISOR.INVESTMENTS on September 5th, 2017On August 28th, the IRS announced tax relief for victims of Hurricane Harvey. The following Texas counties are eligible for tax relief: Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria and Wharton.
On August 30th, they have updated the counties to include Colorado, Fayette, Hardin, Jasper, Jefferson, Montgomery, Newton, Orange, Sabine, San Jacinto and Waller Counties.
The relief grants victims of Hurricane Harvey in the eligible counties until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments.
For individuals affected, you will have to until Jan. 31, 2018, to file returns and pay any taxes that were originally due during this period. This includes 2016 income tax returns on extension until Oct. 16, 2017 as well as the quarterly estimated tax payments due on Sept. 15, 2017 and Jan. 16, 2018. Please note the relief does not apply to payments related to the 2016 annual return as these were originally due on April 18, 2017.
You do not need to contact the IRS. They will automatically provide filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area.
Those in the eligible counties who suffered uninsured or unreimbursed losses from the disaster may choose to claim the loss on their 2017 returned filed next year or amend their 2016 return to claim the loss.
In addition, the IRS has announced that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Harvey and members of their families.
The relief also includes that individuals residing outside the disaster area can take out a retirement plan loan or hardship distribution to provide assistance to a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.
In the release, the IRS indicated the tax treatment of the loan or distribution will remain the same. Therefore, the distribution will be subject to ordinary income tax as well as the 10% penalty for those under 59 ½. The loan proceeds are tax free if repaid within five years or less.
For greater details on the relief granted by the IRS, here are the links to the news releases.
In addition, the followings links will provide guidance on documenting the loss for taxes purposes.
http://www.advisor.investments/claiming-casualty-loss
https://www.irs.gov/uac/top-10-tips-for-deducting-losses-from-a-disaster
https://www.irs.gov/taxtopics/tc515.html
Shantelle M. Palermo, EA
Tax Strategies and Consultation
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