GREAT NEWS: On October 1, 2024 the IRS issued a notice that taxpayers that live in Alabama, Georgia, North Carolina and South Carolina and parts of Florida, Tennessee and Virginia affected by Hurricane Helene can take advantage of the below tax benefits:
Hurricane Tax Relief Benefits
1. No Penalty for Early IRA and 401(k) Distributions up to $22,000
2. 2023 Tax Returns Deadline Extended to May 1, 2025
3. 401(k) Loan Repayment Relief
4. Defer payment of estimated Income and Payroll Taxes to May 1, 2025
Part 1: No Penalty for IRA and 401(k) Distributions
Qualified taxpayers can take early IRA or 401(k) distributions up to $22,000 per disaster and spread the income out over 3 years so pay 1/3 of the tax for 3 years with no 10% penalty. Married filing joint combined allows for $44,000.
Key Points for Individuals:
For taxpayers in Florida - there are 3 disaster declarations, so
If you are located in the disaster declared counties - Pinellas, Hillsborough, Manatee and Sarasota Counties, then:
Individuals can take up to $66,000
Couples can withdraw up to $124,000
View the below maps from the IRS and FEMA:
Hurricane Milton - IRS Link & Map of Covered Counties
Hurricane Helen - IRS Link & Map of Covered Counties
Hurricane Debby - IRS Link & Map of Covered Counties
For taxpayers in GA, SC and NC
If you live in Georgia, South Carolina or North Carolina, you automatically qualify for Hurricane Tax Relief under Hurricane Helene
You may also qualify for parts for Debby or Milton
IRS Guidance Website Links
Part 2: 2023 Tax Returns Deadline Extended to May 1, 2025
Key Points for Individuals:
Individual tax returns must be filed by May 1, 2025 instead of October 15, 2024 if you filed an extension
You are covered under Hurricane Helene if you live in Alabama, Georgia, North Carolina or South Carolina. Otherwise search the list provided by the IRS at this link to see if you qualify.
Use this IRS list to see if you live in a state with a qualified disaster – Click Here
Tax Planning Opportunities:
The Hurricane Tax Relief extension allows qualified taxpayers and businesses to make late IRA contributions and/or 401(k) contributions with employer matches through May 1, 2025 if you have an extension for 2023 already filed.
For example: IRA and 401(k) contributions must be paid by the tax return filing deadline – typically April 15, 2024 or if you filed an extension, October 15, 2024.
Now: If you qualify, you can make an IRA or 401(k) contribution anytime before May 1, 2025.
Hurricane Tax Relief Benefits Table
Contribution Type
|
Contribution Deadline With Extension |
Deadline With Hurricane Relief |
Contribution Amount |
Employee 401(k) Contribution (Sole Proprietors/Single-Member LLCs) | October 15, 2024 |
May 1, 2025 | $23,000 |
Employer 401(k) Contribution (S-Corp/Partnership) | September 15, 2024 | May 1, 2025 | $23,000 |
Individual Retirement Account (IRA) | October 15, 2024 | May 1, 2025 | $7,000 |
Part 3: 401(k) Loan Repayment Relief
Key Points for Individuals:
If you have a 401(k), 403(b) or governmental 457(b)::
Your plan provider can waive the requirement to pay back loans taken against your 401(k) for double the maximum plan loan up to the lesser of $100,000 or 100% of the participant’s vested benefit.
Alternatively, your 401(k) provider can temporarily suspend or pause loan payments for up to one year due during the incident period and up to 180 days afterward.
Tax Planning Opportunities:
For example: If you took a loan of $20,000 against your 401(k), and have to pay back $5,000 each year for 4 years – now due to the IRS tax relief, you don’t have to pay back the loan if you qualify for relief.
For example: If you took a loan of $20,000 against your 401(k), and have to pay back $5,000 each year for 4 years – now due to the IRS tax relief, you don’t have to make a payment on the loan until October of 2026.
Part 4: Defer Estimated Income Taxes & Payroll Taxes until May 1, 2025
Key Points for Individuals:
Defer payment of estimated tax payments to May 1, 2025
No need to pay 2024 quarterly estimated income tax payments due on Jan. 15, 2025
No need to pay 2025 quarterly estimated income tax payments due on April 15, 2025
Defer payment and filing of quarterly payroll and excise tax returns to May 1, 2025 for returns normally due on Oct. 31, 2024, and Jan. 31, 2025 and April 30, 2025.
To learn more, read the details on the Link to IRS Guidance
Tax Planning Opportunities:
For example: If you owe $5,000 in estimated taxes for 2024, you have to pay that amount by January 15, 2025 to cover your estimated tax obligation.
Now due to the IRS Hurricane tax relief, you don’t have to pay the estimated tax payment until May 1, 2025 if you qualify for relief.
Instead you can invest that money into your business or cover expenses and repairs!
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