The Internal Revenue Service has announced tax relief for individuals and businesses in southern California affected by wildfires and straight-line winds that began on Jan. 7.
These taxpayers now have until Oct. 15 to file various federal individual and business tax returns and make tax payments, the agency said.
Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement account.
"For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years," the IRS said. Taxpayers may also be eligible to make a hardship withdrawal.
The Securities and Exchange Commission said Wednesday that it's also closely monitoring the impact of the California wildfires on investors and capital markets. The SEC divisions and offices "will evaluate the possibility of granting relief from filing deadlines and other regulatory requirements for those affected by the wildfires," the agency said in a statement.
The IRS states that it's offering relief to any area designated by the Federal Emergency Management Agency. Currently, individuals and households that reside or have a business in Los Angeles County qualify for tax relief.
The same relief will be available to any other counties added later to the disaster area.
Filing and Payment Relief
The tax relief postpones various tax filing and payment deadlines that occurred from Jan. 7, through Oct. 15. "As a result, affected individuals and businesses will have until Oct. 15, 2025, to file returns and pay any taxes that were originally due during this period," the IRS states.
For instance, the Oct. 15 deadline will now apply to:
- Individual income tax returns and payments normally due on April 15, 2025.
- 2024 contributions to IRAs and health savings accounts for eligible taxpayers.
- 2024 quarterly estimated income tax payments normally due on Jan. 15, 2025, and estimated tax payments normally due on April 15, June 16 and Sept. 15, 2025.
- Quarterly payroll and excise tax returns normally due on Jan. 31, April 30 and July 31, 2025.
- Calendar-year partnership and S corporation returns normally due on March 17, 2025.
- Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025.
- Calendar-year tax-exempt organization returns normally due on May 15, 2025.
Penalties for failing to make payroll and excise tax deposits due on or after Jan. 7 and before Jan. 22 will be abated as long as the deposits are made by Jan. 22, the agency said.
Further, IRS said it "will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area."
Additional Tax Relief
"Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2025 return normally filed next year), or the return for the prior year (2024)," the agency states.
"Taxpayers have extra time — up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) — to make the election," the agency states. "For individual taxpayers, this means Oct. 15, 2026."
Qualified disaster relief payments are generally excluded from gross income.
"In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents," the IRS states.
The IRS said it may provide additional disaster relief in the future.
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