Following the devastating impact of Hurricane Helene, the Internal Revenue Service (IRS) established a range of tax relief provisions to assist individuals and companies in the disaster-affected areas. These relief efforts span many states, including Alabama, Georgia, North Carolina, and South Carolina, as well as parts of Florida, Tennessee, and Virginia. These initiatives are meant to reduce the financial burden on citizens and business owners as they deal with the aftermath of the catastrophe.
As part of these tax relief provisions, qualified taxpayers in designated disaster zones will now have until May 1, 2025, to complete their federal tax returns and pay their tax responsibilities. This extended deadline applies to a wide range of tax-related forms and payments, including federal returns for individuals and businesses for fiscal year 2024, which would ordinarily be due in March and April 2025. Furthermore, taxpayers who received legal extensions for their 2023 forms, as well as those obligated to make quarterly anticipated tax payments, would benefit from the extended deadline.
Reasons for the IRS extension
The IRS based these relief provisions on catastrophe declarations made by the Federal Emergency Management Agency (FEMA). These designations enable the IRS to provide aid to places badly harmed by the hurricane, and the agency has pledged to provide similar assistance to any other localities that may experience similar crisis conditions in the future.
This compensation is automatically provided to taxpayers whose primary address on record with the IRS is in the affected disaster areas. However, taxpayers who have recently relocated and have not changed their current address with the IRS may still receive penalty notifications. If this occurs, taxpayers should contact the IRS directly to waive any applicable penalties. Additionally, taxpayers who do not live in the disaster zones but have vital tax records in these places are eligible for reimbursement. Individuals in this situation can obtain relief by calling the IRS disaster assistance hotline.
In acknowledgment of the considerable financial losses suffered by many as a result of Hurricane Helene, the IRS has adopted rules allowing taxpayers to claim hurricane-related losses. These losses must be uninsured or unreimbursed to qualify, and impacted people may claim them on either their 2024 or 2023 tax returns. To facilitate this, the IRS has extended the time to make this election until October 15, 2025. When submitting a claim for catastrophe-related damages, taxpayers must include the FEMA declaration number for the disaster region. Furthermore, eligible disaster relief payments received to offset personal or property damage are often exempt from taxable income, providing additional financial relief to those affected.
Another key aspect of the IRS’s relief operations is the inclusion of special procedures for individuals who need to access their retirement plans or IRAs following the catastrophe. Early withdrawals from retirement accounts usually result in a 10% penalty for those under the age of 59½. However, for people affected by Hurricane Helene, the IRS has waived the penalty for early withdrawals for disaster recovery. Furthermore, impacted individuals may choose to stretch the revenue from these withdrawals over three years, lowering their immediate tax liability. There are provisions for hardship withdrawals, however specific restrictions will apply depending on the type of retirement plan.
These tax relief provisions are part of a larger federal response to Hurricane Helene’s devastation, which includes work with FEMA and other organizations. FEMA’s damage assessments have played an important role in formulating the IRS’ relief plans. As recovery efforts continue, the IRS remains dedicated to tailoring its support to the changing needs of affected communities, ensuring that those affected by the hurricane receive the comprehensive help they require to rebuild and recover.
