With overwhelming bi-partisan support, President Donald Trump signed sweeping tax relief measures into law for victims of Hurricanes Harvey, Irma and Maria.

U.S. citizens still recovering from the devastation of the recent hurricanes in Texas, Florida and even the U.S. territories in the Caribbean, have counted on relief from FEMA and other government agencies. This help has been invaluable in helping people make repairs to their homes and business, and otherwise recover from the storm.

On Sept. 29, Trump signed into law, H.R. 3823, the “Disaster Tax Relief and Airport and Airway Extension Act of 2017.” What will these measures mean for Florida businesses and residents?

Among other provisions, the new law will provide for penalty free access to retirement funds and spread the taxable income effect over three years, so residents can use those assets to rebuild or repair damages to their homes. It also eliminates the current requirement that uncompensated personal casualty losses exceed 10 percent of adjusted gross income (AGI) before they can be deducted. For area businesses, the law will provide a tax credit for 40 percent of qualified wages (up to $6,000 per employee) paid to employees by a disaster-affected employer, so they can retain employees, while returning to regular operations.

Another provision was designed to encourage charitable giving by those less severely impacted by the storm, by lifting the limitations on the deduction for charitable contributions associated with qualified hurricane relief.

A 'Historic' Bill

With 70 percent of businesses responding to a recent Greater Miami Chamber of Commerce survey indicating that the storm had a negative financial impact on their businesses that will last at least for the next three months, and nearly 40 percent of respondents saying that Irma's impact could be felt well into next year, the tax relief is certainly welcome.

The bill was introduced by Texas Representative, Congressman Kevin Brady, (R). Speaking to the press, Brady called the passage of the bill “historic.” He went on to say “My bill specifically helps hurricane victims keep more of their paycheck, deduct more of the cost of their expensive property damage, and have more affordable and immediate access to money they have saved for their retirement. The legislation will also encourage even more Americans to donate generously to help those in need. Taken together, these tax relief measures will help more people be able to bear the tremendous expense of recovering from these destructive hurricanes.”

Other benefits in the new law include:

  • Elimination of the current requirement that taxpayers itemize deductions to access this tax relief by allowing for an increase in the individual standard deduction by the disaster loss amount
  • Affords taxpayers the ability to avoid taxation on qualified hurricane distributions from retirements plans if funds are recontributed within three years
  • Allowing taxpayers to replace money withdrawn from retirement plans for home purchases cancelled due to eligible disasters
  • Providing flexibility for loans from retirement plans for qualified hurricane relief
  • Allowing taxpayers to use earned income from 2016 to determine the Earned Income Tax Credit and Child Tax Credit for the 2017 tax year

The Trump administration has indicted that further relief for hurricane victims may be on the way. In a statement released by the White House, the administration said that HR 3823 would “provide targeted tax relief for taxpayers impacted by Hurricanes Harvey, Irma and Maria. In addition to supporting these tax relief measures, the administration will submit further requests to the Congress for supplemental funding in the near future, and looks forward to working with Congress to enact these recovery measures into law.”

Rosamaria D. Bravo, CPA, is a principal in the tax and accounting department at MBAF in Miami.

 

With overwhelming bi-partisan support, President Donald Trump signed sweeping tax relief measures into law for victims of Hurricanes Harvey, Irma and Maria.

U.S. citizens still recovering from the devastation of the recent hurricanes in Texas, Florida and even the U.S. territories in the Caribbean, have counted on relief from FEMA and other government agencies. This help has been invaluable in helping people make repairs to their homes and business, and otherwise recover from the storm.

On Sept. 29, Trump signed into law, H.R. 3823, the “Disaster Tax Relief and Airport and Airway Extension Act of 2017.” What will these measures mean for Florida businesses and residents?

Among other provisions, the new law will provide for penalty free access to retirement funds and spread the taxable income effect over three years, so residents can use those assets to rebuild or repair damages to their homes. It also eliminates the current requirement that uncompensated personal casualty losses exceed 10 percent of adjusted gross income (AGI) before they can be deducted. For area businesses, the law will provide a tax credit for 40 percent of qualified wages (up to $6,000 per employee) paid to employees by a disaster-affected employer, so they can retain employees, while returning to regular operations.

Another provision was designed to encourage charitable giving by those less severely impacted by the storm, by lifting the limitations on the deduction for charitable contributions associated with qualified hurricane relief.

A 'Historic' Bill

With 70 percent of businesses responding to a recent Greater Miami Chamber of Commerce survey indicating that the storm had a negative financial impact on their businesses that will last at least for the next three months, and nearly 40 percent of respondents saying that Irma's impact could be felt well into next year, the tax relief is certainly welcome.

The bill was introduced by Texas Representative, Congressman Kevin Brady, (R). Speaking to the press, Brady called the passage of the bill “historic.” He went on to say “My bill specifically helps hurricane victims keep more of their paycheck, deduct more of the cost of their expensive property damage, and have more affordable and immediate access to money they have saved for their retirement. The legislation will also encourage even more Americans to donate generously to help those in need. Taken together, these tax relief measures will help more people be able to bear the tremendous expense of recovering from these destructive hurricanes.”

Other benefits in the new law include:

  • Elimination of the current requirement that taxpayers itemize deductions to access this tax relief by allowing for an increase in the individual standard deduction by the disaster loss amount
  • Affords taxpayers the ability to avoid taxation on qualified hurricane distributions from retirements plans if funds are recontributed within three years
  • Allowing taxpayers to replace money withdrawn from retirement plans for home purchases cancelled due to eligible disasters
  • Providing flexibility for loans from retirement plans for qualified hurricane relief
  • Allowing taxpayers to use earned income from 2016 to determine the Earned Income Tax Credit and Child Tax Credit for the 2017 tax year

The Trump administration has indicted that further relief for hurricane victims may be on the way. In a statement released by the White House, the administration said that HR 3823 would “provide targeted tax relief for taxpayers impacted by Hurricanes Harvey, Irma and Maria. In addition to supporting these tax relief measures, the administration will submit further requests to the Congress for supplemental funding in the near future, and looks forward to working with Congress to enact these recovery measures into law.”

Rosamaria D. Bravo, CPA, is a principal in the tax and accounting department at MBAF in Miami.