Victims of Hurricane Harvey, Irma, and Maria get Relief from Congress.
They can take casualty losses from the storms even if they don’t itemize. They’re able to deduct uninsured personal losses in excess of a $500 threshold without regard to the 10% of AGI offset that generally applies to the deduction.
2016 income can be used to figure the 2017 earned income tax credit. Ditto for the child tax credit. This will prevent a cut in these tax breaks for lower-incomers whose jobs have been suspended or lost due to the hurricanes.
The 10% penalty on pre-age 59 1/2 payouts from retirement accounts is waived, as long as the IRA or retirement plan withdrawals are not greater than $100,000. The income tax due on such distributions can be spread over a three-year period. Amounts recontributed to the plan or IRA during that span will be treated as rollovers, and tax paid on those amounts can be recovered by filing an amended Form 1040.
Victims can borrow more from company retirement plans such as 401(k)s, up to the lesser of $100,000 or 10% of the accounts. Loan repayments can be deferred.
The 50% of AGI limitation on charitable contributions is suspended for any cash donations to qualified charities that aid victims of Harvey, Irma, and Maria. Corporations can fully deduct cash donations for hurricane relief. The usual 10% of taxable income limit does not apply to such contributions.
There’s a special break for hurricane-affected firms that keep paying workers even though business operations have been suspended in the wake of the storms. They get a 40% tax credit for up to $6,000 of wages paid to each idle employee.
Source: The Kiplinger Tax Letter, October 6, 2017
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