The Disaster Tax Relief and Airport and Airway Extension Act of 2017 that was signed into law on September 29 included the following tax provisions that provide relief for taxpayers affected by Hurricanes Harvey, Irma and Maria for 2017 federal tax returns.
Deduction for Personal Casualty Losses
Uncompensated losses in an applicable hurricane disaster area:
Special Rule for Determining 2017 Earned Income for the Earned Income Tax Credit and Child Tax Credit
Qualified individuals may use their earned income from 2016 to determine their earned income tax credit and their child tax credit for their 2017 federal income tax return.
Qualified individuals are those whose principal place of abode was located in the Hurricane Harvey, Irma or Maria disaster zone on the date of each applicable hurricane and the individual was displaced from their home because of the hurricane.
Penalty-Free Access to Retirement Funds
Charitable Contributions for Hurricane Relief
Suspends the limitation on charitable contributions associated with hurricane relief that are made between August 23, 2017 and December 31, 2017.
Provides qualifying businesses a tax credit for 40 percent of wages (up to $6,000 per employee) paid by a disaster affected employer to an employee from a core disaster area.
The IRS will need to provide everyone with more guidance on how these tax provisions are to be reported on the 2017 federal return. We will provide this information once it becomes available.