On December 12, 2024, the long-awaited Federal Disaster Tax Relief Act of 2023 was signed into law. The Act offers several key benefits for disaster victims including those affected by hurricanes, wildfires, and the East Palestine, OH train derailment. Here are the main points you should know:
1. Casualty Loss Deductions
The requirement that personal casualty losses must exceed 10% of adjusted gross income (AGI) has been eliminated. Now, losses are deductible once they exceed $500.
2. Above-the-Line Deductions
Casualty losses can be claimed “above the line,” which means even if clients do not itemize their deductions, they can still take the casualty loss in addition to the standard deduction.
3. Retroactive and Ongoing Relief
The relief covers any area where the President declared a major disaster between January 1, 2020, and February 10, 2025.
4. Qualifying Disaster Payments
The Act also provides relief for Qualified Wildfire and East Palestine disaster payments.
5. Amended Returns
Clients who had casualty losses in previous years but did not qualify under the old law should consider filing amended returns to benefit from the new provisions.
If you have been impacted by a Federally Declared Disaster, we encourage you to reach out to your trusted advisor to maximize the benefits available to you under this new legislation.
Click for IRS information on the most recent tax relief provisions for taxpayers affected by disaster situations.
