New Law Provides More Help for Past Disaster Victims

President Biden last month signed significant legislation providing additional relief to taxpayers that suffered losses related to federally declared disasters not only in 2024 but for prior years as well.

The Federal Disaster Tax Relief Act includes the following provisions:

Allows taxpayers to deduct personal casualty losses from qualified disasters without being subject to the 10% adjusted gross income threshold. Casualty losses only need to exceed a minimal $500 per loss floor, and taxpayers can deduct this loss even if they don’t itemize and take the standard deduction. This treatment is available for all presidentially declared disasters occurring between Jan. 1, 2020, and Jan. 11, 2025.

Excludes from gross income any qualified wildfire relief payments received for losses incurred due to federally declared forest or range fires. This provision applies to qualified wildfire relief payments received by the individual during taxable years beginning after Dec. 31, 2019, and before Jan 1, 2026.

Provides relief for victims of the East Palestine, Ohio, train derailment Feb. 3, 2023. In general, relief payments are excluded from income. This applies for amounts received on or after the date of the derailment.

Amended returns may need to be filed to take advantage of this tax relief. The complete legislation can be found here.