5 Tax Highlights: Hurricane Harvey, Irma & Maria Victims
It’s been 2 months since Hurricane Harvey, Hurricane Irma and Hurricane Maria hit, changing lives forever. The Disaster Tax Relief and Airport and Airway extension Act of 2017 signed into law on September 29th offers specific disaster victims alternative methods of reporting eligible Hurricane Harvey, Irma and Maria disaster losses on their 2017 tax returns. Remember these are temporary and limited to specifically identified areas and victims.
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#1 The Disaster Tax Relief and Airport and Airway Extension Act of 2017 has changed the rules for reducing the loss base. Regular casualty losses are subject to a $100 reduction per occurrence. For qualified Hurricane Harvey, Hurricane Irma and Hurricane Maria disaster victims, casualty losses are subject to a $500 reduction per occurrence.
#2 The Disaster Tax Relief and Airport and Airway Extension Act of 2017 has relaxed the rules for the casualty loss deduction base. Regular casualty losses are further limited to an amount in excess of 10% of adjusted gross income. For qualified Hurricane Harvey, Hurricane Irma and Hurricane Maria, casualty losses are not subject to the 10% limitation
#3 The Disaster Tax Relief and Airport and Airway Extension Act of 2017 has changed the rules for non- itemizers. Qualified Hurricane Harvey, Hurricane Irma and Hurricane Maria casualty losses are able to be added to the standard deduction. This is a wonderful benefit for those incurring losses with little or no other itemized deductions and will be able to obtain an additional deduction. This option is not available for regular casualty losses.
#4 Employee retention tax credit: Eligible employers are allowed to take a credit of up to 40% of wages paid per employee maximum of $6,000 of wages and $2,400 of credits per employee through the day that the business began operations again (but no later than January 1, 2018). Note that there is no requirement that the employee actually worked.
#5 Charitable qualified contributions prior to December 31, 2017– are not limited by income as long as they are for relief efforts in the hurricane disaster areas. (Qualified contributions must also be substantiated, with a contemporaneous written acknowledgement that the contribution was/is to be used for relief efforts).