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Victims of presidentially declared disasters in recent years who couldn\u2019t previously claim a casualty loss deduction may now be able to claim a refund. Additional tax relief also might be available. Read on to learn more about the potential opportunities for victims of certain disasters.<\/p>\n
Loosened restrictions for casualty losses<\/strong><\/p>\n The tax relief comes via the Federal Disaster Tax Relief Act (FDTRA), which was signed into law by former President Biden in December 2024. Among other things, the law makes it easier to claim a deduction for qualified disaster-related personal casualty losses during a specific time\u00a0period.<\/p>\n Previously, you could claim such a deduction only if you itemized your deductions. It was further limited by a $100 reduction per loss, and you were allowed to deduct only the amount of the loss that exceeded 10% of your adjusted gross income. The so-called 10% rule was applied after the $100 reduction.<\/p>\n Under the FDTRA, those restrictions no longer apply if you suffered a casualty loss attributable to a presidentially declared disaster (referred to as a \u201cqualified disaster loss\u201d) that began on or after December\u00a028, 2019, and on or before December\u00a012, 2024, and ended no later than January\u00a011, 2025. (Note that this relief doesn\u2019t apply to the 2025 California wildfires. See \u201cWildfire relief\u201d below for information on other relief available to the victims of those and other more recent\u00a0fires.)<\/p>\n In addition, the president must have made the disaster declaration between January\u00a01, 2020, and February\u00a010, 2025. The limit for such losses is that each separate casualty loss is deductible only after it exceeds\u00a0$500.<\/p>\n Be aware that casualty losses are generally deductible in the year the loss is incurred. For example, if a qualified disaster occurred in 2022, but your insurance company didn\u2019t deny your related claim until 2024, you\u2019d deduct the loss for 2024. But you now have the option to deduct any loss attributable to a presidentially declared disaster in the tax year prior to the occurrence.<\/p>\n Wildfire relief <\/strong><\/p>\n The FDTRA provides that \u201cqualified wildfire relief payments\u201d \u2014 including those made to Los Angeles County taxpayers affected by the 2025 California wildfires \u2014 can be excluded from gross income for tax purposes. It\u2019s been estimated that this provision will return $512\u00a0million in taxes to wildfire victims. And it\u2019ll protect payment recipients from losing certain income-based benefits, such as health insurance premium subsidies, Veterans Administration co-pay assistance and federal student\u00a0aid.<\/p>\n The exclusion applies to any amount received by, or on behalf of, an individual as compensation for losses, expenses or damages, including\u00a0for:<\/p>\n The compensation must have been granted for a federally declared disaster that was declared after December\u00a031, 2014, as the result of a forest or range fire. The payments must be received during tax years beginning after December\u00a031, 2019, and before January\u00a01, 2026. Compensation from insurance and other reimbursements doesn\u2019t qualify for the exclusion.<\/p>\n The law prohibits double-dipping. You can\u2019t claim a deduction or credit for any expense excluded from income under the provision. And, if you use excluded qualified payments to purchase or improve property, you may not increase your basis or adjusted basis in the property by the excluded amount.<\/p>\n The IRS is also providing some relief related to filing deadlines for individuals and households that reside or have a business in Los Angeles County and were affected by wildfires and straight-line winds that began on January\u00a07, 2025. These taxpayers have until October\u00a015, 2025, to file various federal individual and business tax returns and make tax payments.<\/p>\n The new deadline applies to individual income tax returns and payments normally due on April\u00a015, 2025. This relief also applies to the 2024 estimated tax payment that was due on January\u00a015, 2025, and estimated tax payments normally due on April\u00a015, June\u00a016, and September\u00a015,\u00a02025.<\/p>\n It also applies\u00a0to:<\/p>\n East Palestine train derailment relief<\/strong><\/p>\n The FDTRA also extends relief to victims of the train derailment on February\u00a03, 2023, in East Palestine, Ohio. \u201cEast Palestine Train Derailment Payments\u201d can be excluded from gross income.<\/p>\n The payments include any amount received by, or on behalf of, an individual as derailment-related compensation\u00a0for:<\/p>\n The compensation must have come from a federal, state or local government agency, Norfolk Southern Railway, or any subsidiary, insurer or agent of Norfolk Southern Railway.<\/p>\n Next steps for taxpayers<\/strong><\/p>\n If you\u2019re claiming any of the benefits under the FDTRA for a tax year for which you\u2019ve already filed a tax return without claiming the benefits, you\u2019ll need to file an amended return. We can file your amended return electronically if you\u2019re amending a return for the current or prior two tax\u00a0periods.<\/p>\n You must file Form\u00a01040-X, Amended U.S. Individual Income Tax Return, on paper to amend your return if 1)\u00a0the amended return is for earlier years, or 2)\u00a0your prior year return was originally filed on paper during the current processing year. If you file your amended return electronically, you can elect to have any refund directly deposited into a U.S. financial institution account. Contact us with any questions and to prepare an amended return for\u00a0you.<\/p>\n \u00a9 2025<\/em><\/p>\n <\/body> Victims of presidentially declared disasters in recent years who couldn\u2019t previously claim a casualty loss deduction may now be able to claim a refund. Additional tax relief also might be available. Read on to learn more about the potential opportunities for victims of certain disasters. Loosened restrictions for casualty losses The tax relief comes via […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,59,10],"tags":[8,11,12],"class_list":["post-17290","post","type-post","status-publish","format-standard","hentry","category-articles","category-etra","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=17290"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17290\/revisions"}],"predecessor-version":[{"id":17291,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/17290\/revisions\/17291"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=17290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=17290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=17290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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