In light of the devastation caused by Hurricane Milton, the IRS has announced some tax relief for affected individuals and businesses. Taxpayers in the declared disaster areas will have extended deadlines for filing federal tax returns and making payments.

Hopefully, any bad results from the hurricane didn’t affect you too much personally. But if so, our thoughts are with you! If your home was damaged, read the casualty losses section below to see if you qualify.

Key Tax Relief Highlights:

• Extended Deadlines: Affected taxpayers now have until May 1, 2025 to file their 2024 individual and business tax returns and make federal tax payments. This includes tax returns due in March or April 2025 and returns for 2023 with valid extensions. (Note, this will primarily be personal returns extended to Oct 15th 2024, or corporate returns filing as a “C Corporation” that have been extended to Oct 15th 2024. Unfortunately, if your partnership or S Corp return was due Sept 15th, you are still late on this.)

• Estimated Tax Payments: Quarterly estimated tax payments, typically due in January and April 2025, are also extended to May 1, 2025.

• Payroll and Excise Taxes: Quarterly payroll and excise tax returns due between October 31, 2024, and April 30, 2025, are eligible for the extension.

• Deposit Penalty Relief: Penalties on payroll and excise tax deposits due on or after October 5, 2024, and before October 21, 2024, will be abated if the deposits are made by October 21.

This relief applies to taxpayers affected in the relevant counties, which is many. The full list can be found on the IRS website. The IRS will automatically apply this relief.

Casualty Losses: Understanding Your Deductions

If your property was damaged or destroyed during the hurricane, you may be able to claim a casualty loss on your federal tax return. Here’s what you need to know:

• What is a Casualty Loss?

  A casualty loss occurs when property is damaged, destroyed, or lost due to a sudden, unexpected, or unusual event like a hurricane. For tax years 2018 through 2025, personal casualty losses are only deductible if they result from a federally declared disaster.

• Deductible Items:

  You may be able to deduct losses related to your home, household items, and vehicles, but you cannot deduct losses that are covered by insurance unless you have filed a claim for reimbursement. Losses are reduced by any insurance or other reimbursements you receive.

• Calculating Your Casualty Loss:

  For personal-use property, the deductible amount is the lesser of:

  • The adjusted basis of the property, or

  • The decrease in its fair market value due to the disaster.

  For business or income-producing property, the deductible amount is the adjusted basis of the property minus any salvage value and insurance reimbursements.

Claiming Casualty and Theft Losses

If you’re filing your own taxes, here is a bit of information on how to claim this loss. Taxpayers can claim casualty and theft losses by filing Form 4684, Casualties and Thefts, and may need to refer to Publication 547 for more detailed guidance. If your loss qualifies, you can deduct the loss on your return for the year the disaster occurred or for the previous year. This option can provide immediate tax benefits by reducing last year’s tax liability.

If you’ve been affected by Hurricane Milton, take advantage of this tax relief and consider consulting your accountant or tax advisor to ensure you're maximizing your deductions.

For more information on this tax relief and to determine your eligibility, visit the IRS website or contact our firm for personalized guidance

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