When President Trump signed the Taxpayer Certainty and Disaster Tax Relief Act of 2019 into law, it extended the deadlines of many provisions that had expired. We shared much of this information in a recently published article that included a synopsis of some of the specific deadlines that have now been extended.
Along with tax relief for areas such as mortgage debt exclusion, mortgage insurance premiums, tuition and fees deduction, energy efficient tax credits, and medical expense deduction, to name a few, the act also includes special tax relief for certain disaster victims.
Who qualifies for the disaster relief portion of the law?
Under the Act, relief will be provided to those in areas determined by the President to be areas where disasters occurred between January 1, 2018 and 30 days following the date of enactment of the law.
What are some of the provisions providing relief under the Act?
Special Rules for Qualified Disaster-Related Personal Casualty Losses – this provision eliminates the current law requirement that personal losses have to exceed 10% of adjusted gross income and eliminates the requirement that victims have to itemize their tax deductions in order to claim a casualty loss. This streamlined process is more generous to the tax payer and makes it much easier to file the claim and recover the loss.
Eased Access to Retirement Funds – much like the previous provision, under the ‘eased access’ stipulation, hurricane victims are no longer subject to the 10% early plan withdrawal penalty for qualified disaster relief distributions from retirement funds up to $100,000. If victims had to cancel the purchase of a home as a result of an eligible disaster, they can also re-contribute their retirement plan withdrawal for home purchases or construction and avoid the tax on the plan withdrawal.
Special Rules for Determining Earned Income Tax Credit and Child Tax Credit – under this guideline, victims who were in a designated disaster area are permitted to use income from 2018, if it is lower, to qualify for the Earned Income Tax Credit and the Child Tax Credit.
Suspension of charitable contribution limits – this provision temporarily allows for a deduction for charitable contributions associated with qualified disaster relief without any of the current income limitations.
Automatic Extension Filing Deadline – the signing of this Act made it possible for anyone whose principal place of residence or business is located in a disaster area, to be automatically granted a 60-day extension for any tax filing.
If you have any questions about this unique provision and its impact on disaster victims, please contact me at Mary.Ford@SobelCoLLC.com or call me at 973-994-9494 and I will be glad to assist you.
