Find Your Specialist


Contact Us

    Go Back

    Disaster Relief Tax Provisions

    The H.R. 1865 government funding legislation contains numerous tax-related provisions designed to help taxpayers affected by natural disasters and to encourage charitable donations for disaster relief. These provisions are included in a division of the bill entitled the “Taxpayer Certainty and Disaster Tax Relief Act of 2019.”

    Interestingly, not all changes are related to natural disasters.

    Use of retirement funds. The Disaster Act waives the 10% early withdrawal penalty for retirement fund distributions used for disaster relief, for up to $100,000. It also allows taxpayers to put their money back in retirement plans for withdrawals used for home purchases canceled due to disasters, and it provides more flexibility for loans from retirement plans for hurricane relief.

    Employee retention credit for employers affected by disasters. The Act creates a 2018-2019 employee retention credit for 40% of wages (up to $6,000 per employee) paid by a disaster-affected employer to an employee from a core disaster area.

    Temporary suspension of limitations on charitable contributions. The Act temporarily suspends the 60% and 10% limitations on the deduction for charitable contributions if the contributions are made for disaster relief.

    Special rules for personal casualty losses. The Act eliminates the 10% floor on casualty losses caused by a natural disaster and allows the deduction even if taxpayers do not itemize their deductions.

    Automatic extension of tax filing deadline. The Act gives a 60-day extension for tax filings for taxpayers with a principal residence or business in a disaster area, for federally declared disasters after December 20, 2019.

    Modification of excise tax on private foundations. The Act simplifies the private foundation excise tax on investment income to replace the two-level tax with a flat 1.39% tax. This provision is designed to encourage larger, one-time donations for disaster relief and applies to tax years beginning after December 20, 2019.

    Tax-exempt status of certain mutual or cooperative telephone or electric companies. The Act modifies the definition of income used to determine the tax-exempt status of a mutual or cooperative telephone or electric company to exclude certain government grants, contributions, and assistance.

    Related Articles

    • 01.25.2023

      A New Year Means New Privacy Laws

      Ever since the General Data Protection Regulation (GDPR) came into effect in May 2018, US state privacy laws have been passed in Virginia, Colorado, Connecticut, Utah and, most pressing of them all, California. The California Privacy Rights Act (CPRA) went…

      Continue Reading
    • 01.19.2023

      The New Rules Under Section 174

      Internal Revenue Code Section 174 has long been used by taxpayers to deduct certain expenses related to research and experimentation (R&E) in the current year.  The code section was originally enacted in 1954 to eliminate uncertainty in the tax accounting…

      Continue Reading
    • 12.20.2022

      IRS Customer Service May Improve in 2023

      With 4,000 new customer service representatives and plans to hire 700 new Taxpayer Assistance Center (TAC) employees, taxpayers soon may get relief from endless hold times, no in-person help and unresolved problems.

      Continue Reading
    • 12.12.2022

      Reduce Taxable Income with IRA Distributions Transfers

      IRA owners who are age 70½ or over can transfer up to $100,000 per year to charity to reduce their taxable income. These transfers, known as qualified charitable distributions or QCDs, offer end-of-the year tax savings and can count toward required minimum distributions (RMDs) that taxpayers who are age 72 must make each year. Think of it as a tax-free charitable rollover of IRA funds.

      Continue Reading
    • 12.02.2022

      UK R&D Tax Reliefs – Where Are We Now?

      In the November 2022 Autumn Statement, the Chancellor announced significant changes to the current Research and Development (R&D) tax reliefs. The key announcements were a change to the applicable rate of the Research and Development Expenditure Credit (RDEC) and a…

      Continue Reading
    • 12.01.2022

      1099s Required for 2022 Tax Year

      Taxpayers earning income from selling goods or providing services may receive a Form 1099-K, Payment Card and Third-Party Network Transactions, for the first time in early 2023, when the 2022 forms are due. The requirement to file Forms 1099 have…

      Continue Reading
    • 11.28.2022

      IRS Uncovers $3.1 Billion in COVID Fraud

      The IRS Criminal Investigation department (IRS-CI) has partnered with the Justice Department to uncover and prosecute fraudulent activities related to the federal government’s COVID relief programs. To date, the IRS has conducted 840 investigations involving fraud amounts totaling more than…

      Continue Reading
    • 10.25.2022

      IRS Inflation Reduction Act Increases Funds

      The Inflation Reduction Act of 2022, enacted in August, increased funding for the IRS by $80 billion through 2031 for enforcement activities, operations support, systems modernization and taxpayer services. The legislative language, Treasury Secretary Janet Yellen and IRS Commissioner Charles…

      Continue Reading

    Privacy Overview

    When you use or access the Site, we use cookies, device identifiers, and similar technologies such as pixels, web beacons, and local storage to collect information about how you use the Site. We process the information collected through such technologies, which may include Personal Information, to help operate certain features of the Site (e.g., to prevent online poll participants from voting more than once), to enhance your experience through personalization, and to help us better understand the features of the Site that you and other users are most interested in.

    You can enable or disable our use of cookies per category.
    Always Enabled