Florida Hurricane Relief–IRS Offers Extended Deadlines and Tax Benefits

Florida-Based Individuals and Businesses Are Granted Extensions to File and Pay

Adding to previously announced relief for taxpayers affected by Hurricanes Helene and Debby, the IRS has extended tax filing and certain payment deadlines to May 1, 2025, for taxpayers affected by Hurricane Milton throughout Florida. With this automatic extension, taxpayers have additional time to file both federal individual and business tax returns, covering 2024 returns normally due during March and April 2025 as well as 2023 individual and corporate returns with valid extensions. It also applies to tax year 2024 payments, including quarterly estimated tax payments. However, the extension does not apply to tax year 2023 payments.

Eligible Florida Counties for Hurricane-Related Federal Tax Relief

In response to Hurricane Milton, the IRS granted relief to taxpayers in 51 counties throughout Florida, including individuals and businesses in six counties—Broward, Indian River, Martin, Miami-Dade, Palm Beach, and St. Lucie—that previously did not qualify for relief under Hurricanes Debby or Helene. The disaster tax relief period for those affected by Hurricane Milton runs from Oct. 5, 2024, to May 1, 2025. Previously, Hurricane Helene disaster tax relief applied to 41 counties in Florida, while Hurricane Debby applied to 61 Florida counties. According to the recent IRS announcement, individuals and businesses in the 20 counties that received relief under Hurricane Debby but not Hurricane Helene, will now qualify for disaster tax relief under Hurricane Milton, extending their eligibility period from Aug. 1, 2024, through May 1, 2025. Those counties are:

• Baker
• Brevard
• Clay
• DeSoto
• Duval
• Flagler
• Glades
• Hardee
• Hendry
• Highlands
• Lake
• Nassau
• Okeechobee
• Orange
• Osceola
• Polk
• Putnam
• Seminole
• St. Johns
• Volusia

Taxpayers Outside of Florida May Still Qualify Through Their Florida-Based Preparer

Per the IRS, “a taxpayer does not have to be located in a federally declared disaster area to be an ‘affected taxpayer.’ For taxpayers to be deemed ‘affected’, the records needed to meet a postponed filing or payment deadline must be located in a covered disaster area. Taxpayers located outside of a disaster area may be eligible for disaster tax relief on the condition that their preparer is:

• In a federally declared disaster area, and
• The preparer is unable to file or pay on their behalf.

However, there is a qualification process. Consult with your tax professional to learn more.

Available Tax Benefit Options for Affected Taxpayers

With the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), it became harder for taxpayers to claim a casualty loss. Under prior law, an individual could claim a personal casualty loss for property not used in a trade or business or a transaction entered into for profit if the loss arose from fire, storm, shipwreck, or other casualty. However, following the enactment of the TCJA (which is effective until Dec. 31, 2025), deductions for personal casualty losses are only allowed to the extent of personal casualty gains or losses attributed to a qualified disaster. A qualified disaster loss is defined as a loss attributable to a federally declared disaster, which is any disaster determined by the President of the United States to warrant federal assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. In addition to the above limitations, there are also limits on the amount taxpayers can claim as a loss. A taxpayer’s casualty loss from personal-use property is reduced by $100 per casualty and 10% of the taxpayer’s adjusted gross income. The loss is also limited to the taxpayer’s adjusted basis in the property. Treasury regulations under section 165 state that a taxpayer’s casualty loss is limited to the lesser of two amounts:

• The decrease in the value of the property, measured by the difference between the fair market value of the property immediately before and immediately after the casualty, or
• The taxpayer’s adjusted basis in the property.

Moreover, a casualty loss is only available to the extent that there is no prospect that the loss or a portion of the loss will be compensated by insurance or other reimbursement. If a taxpayer claims a casualty loss and in a subsequent year receives a reimbursement for the loss, the payment is reported as income in the year received.

If you believe you may qualify for the highlighted tax benefits or need assistance understanding the regulations surrounding disaster relief, you should contact your tax professional to make sure you’re fully utilizing the available relief options and have guidance through the claims process.

Read the full article at Daily Business Review.