Wildfires, Floods, Hurricanes: How the IRS Has You Back
Disasters like wildfires, floods, hurricanes, and earthquakes are making headlines more than ever. When severe damage occurs, the President may issue a federal disaster declaration — unlocking IRS tax relief to help victims recover financially.
Declared disaster victims may deduct uninsured losses on their tax returns, within certain limits. The IRS also automatically extends tax deadlines by 60 days, and often up to one year.
Taxpayers affected by federally declared disasters can withdraw up to $22,000 from their IRA, 401(k), or 403(b) without penalty. Taxes owed on the withdrawal can be paid over three years.
Government disaster relief payments — including mitigation funds — are generally tax-free. Charitable organization payments are also considered tax-free gifts.
Thanks to 2024 legislation, most wildfire-related payments from 2020 to 2025 are tax-free. Taxpayers who previously paid tax on these may file amended returns — even for 2020 and 2021 — until December 12, 2025.
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Casualty gains (when insurance exceeds property value) can be deferred if you reinvest the payout in repairs or replacements within two years — or four for a main home. Total home loss may also qualify for a gain exclusion of up to $250,000 ($500,000 for joint filers).
Questions? Contact us at helloagfintax.com.
Disasters like wildfires, floods, hurricanes, and earthquakes are making headlines more than ever. When severe damage occurs, the President may issue a federal disaster declaration — unlocking IRS tax relief to help victims recover financially.
Declared disaster victims may deduct uninsured losses on their tax returns, within certain limits. The IRS also automatically extends tax deadlines by 60 days, and often up to one year.
Taxpayers affected by federally declared disasters can withdraw up to $22,000 from their IRA, 401(k), or 403(b) without penalty. Taxes owed on the withdrawal can be paid over three years.
Government disaster relief payments — including mitigation funds — are generally tax-free. Charitable organization payments are also considered tax-free gifts.
Thanks to 2024 legislation, most wildfire-related payments from 2020 to 2025 are tax-free. Taxpayers who previously paid tax on these may file amended returns — even for 2020 and 2021 — until December 12, 2025.
https://owntweet.com/uploa...
Casualty gains (when insurance exceeds property value) can be deferred if you reinvest the payout in repairs or replacements within two years — or four for a main home. Total home loss may also qualify for a gain exclusion of up to $250,000 ($500,000 for joint filers).
Questions? Contact us at helloagfintax.com.
11:31 AM - Apr 08, 2025 (UTC)
