A number of RubinBrown clients either live in or have operations in states that have been affected by disasters during this year’s active hurricane season. The IRS recently announced a number of tax relief initiatives for those individuals and businesses which have been affected by Hurricane Harvey and Irma.
The IRS announced that affected taxpayers (generally defined as individuals who live, and businesses whose principal place of business is located, in the covered disaster area) will have extra time to file certain individual and business tax returns, as well as make certain tax payments. Both individuals and businesses whose returns are on valid extensions will now have until January 31, 2018 to file. In addition, the IRS is extending to January 31 the deadline for individual taxpayers to make estimated tax payments due September 15, 2017 and January 16, 2018.
The IRS also announced that retirement plans (including 401(k) and other employer sponsored plans) can be used to make loans and hardship distributions for victims and families in areas impacted by the hurricane. The ability to use plans as a loan also brings relaxed rules that traditionally apply. Hardship withdraws must be made by January 31, 2018.
Individuals and businesses may want to consider the impact of potential casualty loss deductions on their 2017 tax returns, as well as insurance claims for both damage and lost income due to business interruption. Businesses may also want to consider providing tax-free disaster relief to its employees. An employer can still take a tax deduction for these payments as long as the payments constitute qualified disaster relief payments. Examples of such payments include reasonable and necessary personal, family, living or funeral expenses incurred as a result of a qualified disaster, and expenses incurred for the repair or rehabilitation of a rented or owned personal residence (including contents).
RubinBrown’s Tax Services Group is available to assist with any questions regarding the IRS’ recent announcements, as well as general tax assistance associated with the various provisions above. Please contact one of our professionals for more information or questions regarding these announcements and how your business may be affected.
Please refer to the following links for more information:
Tax Relief for Victims of Hurricane Irma
Tax Relief for Victims of Hurricane Harvey in Texas
Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Harvey
IRS Disaster Resource Guide
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.
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