Federal Disaster Tax Relief Act of 2023 Passes: What You Need to Know
On May 21, 2024, the House of Representatives passed the Federal Disaster Tax Relief Act of 2023, a bipartisan bill that provides tax relief to victims of presidentially declared disasters. This legislation is a significant step forward in supporting those affected by natural disasters, and it’s essential to understand what this means for individuals and how they can benefit from this relief.
As a community that has experienced its fair share of disasters, including Hurricane Harvey and the recent derecho winds, flooding, and tornadoes, the Federal Disaster Tax Relief Act is particularly relevant to Houston and the surrounding areas. We know all too well the devastating impact that disasters can have on our lives, homes, and businesses. With a very active hurricane season ahead of us, it’s crucial that we’re prepared and informed about the resources available to us.
What is the Federal Disaster Tax Relief Act?
The bill allows eligible affected taxpayers to deduct losses from presidentially declared disasters without itemizing deductions on their tax returns. This means that individuals who have suffered losses due to presidentially declared disasters, such as hurricanes or floods, can claim these losses as a deduction without itemizing their deductions. Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). According to an IRS notice, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and would permit the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal, which depends on the plan specifics or the particular IRA rules of its participants to follow.
IRS notice (TX-2024-13) allows affected and eligible taxpayers to have until November 1, 2024, to file various federal individual and business tax returns and make tax payments that were originally due on or after April 26, 2024, and before November 1, 2024.
What should you do going forward?
If you have been affected by a presidentially declared disaster, here are some steps you can take:
Keep records: Keep accurate records of your losses, including receipts, invoices, and other relevant documentation. This will help you prove your losses and claim relief from the Federal Disaster Tax Relief Act.
File your taxes: File your taxes and claim any deductions available to you under this legislation.
Seek assistance: It is always advisable to consult with a qualified tax professional who can offer personalized guidance tailored to your specific circumstances and objectives.
Road to Recovery
If you are not eligible for tax relief under this legislation or still need assistance, other resources are available to you. We encourage you to connect with the 211 Texas/United Way HELPLINE, the community’s key 24/7 service that provides information and referral services for individuals affected by disasters. United Way’s 211 provides callers with the most updated information on assistance with utilities, housing or rental assistance, crisis counseling, access to senior services, information on food pantries in the community, and more.
Assistance through 211 can also be accessed through the following methods in the event of long wait times due to periods of heavy call volume:
- Visit 211texas.org to search resources online or chat online with a specialist.
- Email [email protected] for assistance.
The Federal Disaster Tax Relief Act is a critical step forward in supporting those affected by natural disasters. By understanding what this legislation means and what steps you can take to claim relief, you can better navigate the recovery process and rebuild your life after a disaster.
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