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Disaster Tax Relief Put in Place Before Year End

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Casualty loss deductions, exclusion of relief payments and filing extensions were just some of the tax relief provisions rushed out by Congress, the IRS and the State of Georgia before the end of 2024. One measure, H.R. 5863, had been languishing in Congress for most of 2024 but was expedited at the end of the year after the full extent of the Hurricane Helene disaster became known. Action on the bill was jump-started by a letter sent to Senate leaders in October by a bipartisan group of about 60 legislators, mostly from Georgia, Florida and California, states significantly affected by natural disasters in 2024. According to the bill’s sponsor, Rep. Greg Steube (R-Fla.), “since 2021, more than 300 federally declared disasters have impacted nearly 90% of the country, demonstrating the urgent need for this relief.”  

Federal Disaster Tax Relief Act

Personal Casualty Losses

The new Act extends favorable personal casualty loss deduction rules originally included in the Taxpayer Certainty and Disaster Tax Relief Act of 2020, including: 

  • Eliminating the requirement that casualty losses must exceed 10% of AGI to qualify for the deduction. Losses are deductible to the extent they exceed $500 per casualty.
  • Allowing taxpayers to claim a casualty loss deduction without itemizing.
  • Allowing losses to be taken against alternative minimum taxable income.

Note that the federal legislation did not extend the 2020 law’s temporary suspension of limitations on charitable contributions for disaster relief.

Effective Dates: The casualty loss provisions apply to many recent hurricanes, including Ian, Nicole, Idalia, Helene, Debby and Milton, as well as disasters declared up to 60 days after the law’s enactment. Specifically, the relief covers any presidentially declared major disaster occurring between January 1, 2020, and 60 days after the date H.R. 5863 was enacted, on December 12, 2024.  

Wildfire Relief Payments

The law excludes from income qualified wildfire relief payments, which are amounts received by an individual as compensation for losses, expenses or damages caused by a wildfire disaster if the losses are not compensated by insurance. The exclusion does not include lost wages.  

Effective Date: The exclusion only applies to wildfire relief payments received during taxable years beginning after December 31, 2019 and before January 1, 2026. 

East Palestine Train Disaster

A third section of the bill excludes payments for losses from the East Palestine, Ohio train derailment, received on or after February 3, 2023. 

Amended Returns

Taxpayers may file amended returns or seek a refund if they qualify for one of these relief provisions in prior years covered by the legislation.

Delay in Federal Tax Filings

Individuals and businesses in Georgia have until May 1, 2025 to file various federal individual and business tax returns and to make tax payments. The extension applies to all 159 counties due to the disaster declaration brought about by Hurricane Helene. The extension also applies to Hurricane Debby. Affected taxpayers with returns and payments with due dates postponed until February 3, 2025 due to Hurricane Debby in Georgia also have until May 1, 2025, to file and/or pay. 

The May 1, 2025, filing deadline applies to:  

  • Individuals and businesses that have a 2024 return normally due during March or April 2025.
  • Individuals who had a valid extension to file their 2023 return due to run out on October 15, 2024. Note that because tax payments related to these 2023 returns were due on April 15, 2024, those payments are not eligible for this relief.
  • Calendar-year corporations whose 2023 extensions ran out on October 15, 2024.

The May 1, 2025, deadline also applies to: 

  • Quarterly estimated tax payments due on September 16, 2024, and January 15 and April 15, 2025.
  • Quarterly payroll and excise tax returns normally due on October 31, 2024, January 31, 2025 and April 30, 2025.

The extension covers most types of returns, including: individual, corporate and estate and trust income tax returns; partnership returns, S corporation returns and trust returns; estate, gift and generation-skipping transfer tax returns; annual information returns of tax-exempt organizations; and employment and certain excise tax returns. 

The extended deadlines for filing and payments do not apply to information returns in the W-2 and 1099 series, to Forms 1042-S, or to employment and excise tax deposits.  

State of Georgia Tax Filing Extensions

The Georgia Department of Revenue also has announced that State return and payment deadlines for taxpayers have been extended to May 1, 2025 as well. The extension applies to: 

  • Individuals and businesses that have a 2024 income tax return normally due during March or April 2025;
  • Calendar year corporations whose 2023 extensions run out on October 15, 2024; 
  • Quarterly estimated income tax payments due on January 15 and April 15, 2025; and
  • Quarterly payroll tax returns normally due on October 31, 2024, January 31, 2025 and April 30, 2025. 

Affected taxpayers who had a valid extension until October 15, 2024, to file their 2023 income tax return will now have until May 1, 2025, to file their return. However, because income tax payments related to these 2023 returns were due on April 15, 2024, those payments are not eligible for this relief. 

Taxpayers affected by Hurricane Debby who had income tax returns and payments postponed until February 3, 2025, also receive the income tax extension to May 1, 2025 for those returns and payments.  

Consult Your Tax Advisor

Normally, the IRS automatically applies the extension to affected taxpayers, but some taxpayers may need to notify the IRS. Taxpayers also could receive a late filing notice or penalty from the IRS or the State in error. If you live or have a business in the affected areas, consult Frazier & Deeter today to ensure your returns are accurately filed and you maximize available relief. 

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