Many taxpayers have properties in the areas affected by hurricanes Helene and Milton. Flooding was the most common cause of damage, and most homes and businesses were not covered by flood insurance.
Greetings, Lynn Spencer here from Killingsworth Spencer CPAs. Residents in several states are included in the federally declared disaster area. See list (IRS.gov). While extending deadlines for most returns can be helpful, there is also tax relief.
Disaster Losses – individuals and businesses in the disaster area who suffered uninsured or unreimbursed disaster-related losses from the October 2024 hurricanes may choose to claim them either on their 2023 or 2024 tax return. For a casualty loss to occur it must be sudden, unexpected, and unusual. The property owner must know the adjusted basis of the affected property prior to the loss to determine the decrease in value, and you will need to net any insurance reimbursement or anticipated payment within twelve months of the disaster. Qualified disaster relief payments are generally excluded from gross income. Individual taxpayers have until October 15, 2025, to make this election.
Qualified Retirement Plans – Additional relief may be available to taxpayers participating in a qualified retirement plan. In this case, a taxpayer may take a special disaster distribution that waives the 10% penalty for early withdrawal (under age 59 ½) and allow the income received to be spread out over three years.
SBA Low-Interest Loans – available for small businesses in the affected areas for up to $2M with up to 30 years to repay. Disaster survivors are encouraged to not wait to settle with their insurance company before applying for a disaster loan. Click here to review a more detailed explanation. It was reported in the October 10th edition of the Atlanta Business Chronicle that the SBA will soon run out of disaster relief funding unless Congress approves new funding. SBA Administrator, Isabel Guzman encourages those affected by these disasters to continue to apply for the assistance offered by the Agency.
If you own property in the path of these storms and you have questions about how this may affect your taxes, please feel free to give one of our professionals a call at 770-552-8286.
Disclaimer: This post is for general information only and should not be taken as legal or financial advice