The IRS has announced critical tax relief for individuals and businesses affected by Hurricane Helene, which impacted several U.S. states, including Alabama, Georgia, North Carolina, South Carolina, parts of Florida, Tennessee, and Virginia. For more information on disaster relief and eligibility, visit the IRS’s official disaster tax relief page. If you or your business were affected by this natural disaster, it’s important to understand the extended deadlines, tax benefits, and the steps to take advantage of these relief measures.
Filing and Payment Relief
The tax relief postpones various tax filing and payment deadlines that occurred beginning on:
- Sept. 22, 2024, in Alabama
- Sept. 23, 2024, in Florida
- Sept. 24, 2024, in Georgia
- Sept. 25, 2024, in North Carolina, South Carolina, and Virginia
- Sept. 26, 2024, in Tennessee
This blog will outline the key tax relief measures and how they can help ease the financial burden during recovery.
Extended Deadlines for Filing and Payments
For those in the affected areas, the IRS has extended several key tax deadlines. The most significant extension allows individuals and businesses to file tax returns and make payments by May 1, 2025. This extension applies to various federal returns, including individual and business tax filings. Some of the affected returns include:
- 2024 individual and business tax returns: Usually due in March or April 2025, can now be filed by the extended deadline of May 1, 2025.
- 2023 returns with valid extensions: If you extended your 2023 tax return, you now have until May 1, 2025, to file. However, note that tax payments for these returns were due before the hurricane occurred, and those deadlines haven’t been extended.
- Quarterly estimated tax payments: The relief applies to 2024 and 2025 quarterly estimated tax payments, which are typically due in January and April 2025.
- Quarterly payroll and excise tax returns: Due on October 31, 2024, January 31, 2025, and April 30, 2025, are all covered under this extension.
In addition, the IRS is also providing penalty relief to businesses that make payroll and excise tax deposits. Relief periods vary by state. Visit the Around the Nation page for details.
Who Qualifies for IRS Disaster Tax Relief?
Taxpayers residing or conducting business in federally declared disaster areas are eligible for relief. This includes individuals and businesses in all counties of Alabama, Georgia, North Carolina, and South Carolina. Additionally, 41 counties in Florida, eight counties in Tennessee, and six counties and one city in Virginia are eligible for relief as per FEMA’s disaster declarations.
Moreover, other areas that may receive FEMA disaster declarations related to Hurricane Helene will automatically qualify for this tax relief.
IRS Filing and Penalty Relief
The IRS is providing automatic relief to taxpayers in the affected areas based on their IRS address of record. Taxpayers who have updated addresses within the disaster area will be eligible without needing to take any extra steps. However, if you moved to a disaster area after filing your tax return and do not have an IRS address of record in the area, you may receive a late filing or payment penalty notice. In that case, you should contact the IRS to have penalties removed.
For those outside the disaster area but who rely on records located within it, there is relief available as well. Simply contact the IRS at 866-562-5227 if you need assistance or are working with recognized relief organizations helping in disaster recovery.
Claiming Disaster-Related Losses on Your Tax Return
One of the most significant tax advantages offered to those affected by Hurricane Helene is the ability to claim uninsured or unreimbursed disaster-related losses. You can choose to report these losses on either your 2024 tax return (filed next year) or your 2023 return (filed this year). This flexibility allows taxpayers to decide which option is more beneficial based on their financial situation.
When claiming disaster-related losses, be sure to:
- Write the FEMA declaration number on your tax return.
- Carefully document the losses and any insurance payments or reimbursements received.
Additionally, you have up to six months after the due date of your federal income tax return (without considering any extension) to make this election. For individual taxpayers, this means you have until October 15, 2025.
Qualified Disaster Relief Payments
Taxpayers who receive qualified disaster relief payments can generally exclude these payments from their gross income. This exclusion covers payments received from government agencies to cover essential personal, family, living, or funeral expenses, as well as costs related to home repairs or the replacement of damaged contents.
For more information on what qualifies as taxable versus non-taxable income, consult the IRS’s Publication 525, which details taxable and non-taxable income.
Retirement Plan and IRA Relief
For taxpayers participating in a retirement plan or individual retirement arrangement (IRA), additional relief may be available. Special disaster distributions may be taken without facing the usual 10% early withdrawal penalty, and you may be eligible to spread the income tax burden of these withdrawals over three years. This can significantly ease the financial burden on those who need to access retirement funds to cover disaster-related expenses.
In some cases, hardship withdrawals are also available, but be sure to consult with your retirement plan provider for specific guidance.
Coordinated Federal Response
The tax relief provided by the IRS is part of a larger coordinated federal response, which includes FEMA and other disaster relief agencies. For more information on how federal disaster relief can help you, visit disasterassistance.gov.
The IRS may announce additional relief in the future based on FEMA assessments of the affected areas. Stay informed by checking the Disaster Assistance and Emergency Relief page on the IRS website for updates.
Next Steps: How to Take Advantage of Tax Relief
If you or your business were affected by Hurricane Helene, it’s essential to act quickly to take full advantage of the IRS disaster relief measures. Here’s what you should do:
- Check your eligibility: Confirm that your location is covered by the FEMA disaster declaration and that you qualify for relief.
- Document losses: Keep detailed records of any disaster-related losses, insurance claims, and relief payments received.
- Consult a tax professional: Consider working with a tax advisor to determine the best strategy for filing your tax returns and making any claims related to disaster losses.
For help with tax preparation and to learn how disaster tax relief may impact you or your business, contact us today. Our team of experts is ready to guide you through the process and ensure that you take full advantage of the available tax relief.
