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October 10, 2017

Disaster Tax Relief Act Provides Assistance for Hurricane Victims

Targeted tax relief is on the way for victims of Hurricane Harvey, Irma and Maria. On September 29, President Trump signed the Disaster Tax Relief and Airport and Airway Extension Act of 2017. While tax deadline extensions were already granted for hurricane victims, the Disaster Tax Relief Act offers more extensive relief options for affected taxpayers.

Summary of Disaster Tax Relief

The Disaster Tax Relief and Airport and Airway Extension Act includes many extensive tax relief measures. Below are the main points for hurricane victims:

  • Removes the current requirement that uncompensated personal casualty losses exceed 10% of adjusted gross income to qualify for the deduction
  • Eliminates the current requirement that taxpayers must itemize deductions to access tax relief
  • Provides an exception to the 10% early retirement plan withdrawal penalty for qualified hurricane relief distributions
  • Allows for the re-contribution of retirement plan withdrawals for home purchases canceled due to eligible disasters
  • Provides flexibility for loans from retirement plans for qualified hurricane relief
  • Temporarily suspends limitations on charitable contribution deductions associated with qualified hurricane relief made before December 31, 2017
  • Provides a tax credit for 40% of wages, up to $6,000 per employee, paid by a disaster-affected employer to each employee from a core disaster area
  • Allows taxpayers to use earned income from 2016 to determine the Earned Income Tax Credit and Child Tax Credit for the 2017 tax year

Qualifying for Tax Relief

For Hurricane Harvey, a “qualified individual” is one whose principal residence on Aug. 23, 2017 was located either in the Hurricane Harvey disaster zone or in the Hurricane Harvey disaster area, and the individual was evacuated from their residence by reason of Hurricane Harvey. Similar definitions apply for Hurricane Irma, using a Sept. 4, 2017 date, and Hurricane Maria, using a Sept. 16, 2017 date.

Read The Disaster Tax Relief and Airport and Airway Extension Act of 2017 for more information, or contact an Anders advisor to learn how you may benefit from the tax relief.

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