On September 29, 2017, President Trump signed the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (“Bill”). This bill extends several federal aviation programs set to expire, aviation taxes, and public health programs through March 31, 2018. It also provides targeted tax relief for businesses and individuals affected by Hurricanes Harvey, Irma and Maria. Below are some of the key provisions of this bill.

Eased Casualty Loss Rules

  • Individuals affected by one of the three major hurricanes can take a deduction for a personal casualty loss that exceeds $100. Previously, the loss needed to exceed $100 and 10% of your adjusted gross income. The bill also provides this relief to non-itemizers as any allowed casualty loss can increase an individual taxpayer’s standard deduction or their itemized deductions.

Eased Access to Retirement Funds

  • Individuals impacted by one of the hurricanes above can take a loan of up to $100,000 from their retirement plan and the payback period is extended to six years. Additionally, distributions prior to age 59 ½ are not subject to the 10% early withdrawal penalty if the distribution is a qualified core hurricane disaster distribution.  You can also spread the income tax on the distribution over 3 years.

Charitable Contribution Limitations

  • Contributions for relief efforts of the three major hurricanes are not subject to the income limitations. Qualified contributions must be made between August 23, 2017, and December 31, 2017, in cash, to an organization providing relief efforts in the core hurricane disaster areas.

Employee Retention Tax Credit for Employers

  • Eligible employers can take a tax credit up to 40% of qualified wages (up to $6,000 per employee) paid by a disaster-affected employer in a core hurricane disaster area to a qualified employee.

In addition to the above provisions, the IRS has also granted an automatic extension of time to file returns for those affected by one of the hurricanes. This extends individual tax returns from October 15, 2017, to January 31, 2018, and extends business tax returns from September 15, 2017, to January 31, 2018.

Contact us if you, your business, or your employees have been affected by one of these hurricanes and would like to discuss how you can leverage this new bill.

About the Authors

Cindy H. Mitchell

CPA
Senior Manager, Taxation Services

Theodore A. Wagner

CPA, CVA
Cleveland Managing Partner, Taxation Services

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