Wednesday, October 4, 2017


On September 29, Trump signed into law H.R. 3823, the "Disaster Tax Relief and Airport and Airway Extension Act of 2017".
The disaster relief component of this Act makes temporary changes to the Tax Code for individuals and businesses who were affected in –
* the Hurricane Harvey disaster area on or after August 23, 2017,
* the Hurricane Irma disaster area on or after September 4, 2017, and
* the Hurricane Maria disaster area on or after September 16, 2017.
The Act –
(1) eliminates the current requirement that the allowable deduction for net casualty losses from the above disasters must be reduced by 10% of Adjusted Gross Income;
(2) eliminates the current requirement that taxpayers must itemize deductions on Schedule A to claim a casualty loss deduction for the above disasters (the deduction will be treated as an additional Standard Deduction – and this additional deduction will be allowed in calculating the Alternative Minimum Tax);
(3) provides an exception to the 10-percent early retirement plan withdrawal penalty for premature distributions related to hurricane relief for the above disasters;
(4) allows for the re-contribution of retirement plan withdrawals for home purchases cancelled due to the above disasters;
(5) provides flexibility for loans from retirement plans for qualified hurricane relief for the above disasters;
(6) temporarily suspends the 20%, 30% and 50% limitations on charitable contribution deductions to qualified organizations associated with hurricane relief for the above disasters made before December 31, 2017;
(7) creates an “Employee Retention Credit” of 40% of wages (up to $6,000 per employee) paid for employers that conducted an active trade or business in the above listed disaster areas on the date of the disaster and the active trade or business for which was rendered inoperable for some period of time following the disaster; and
(8) allows taxpayers to use earned income from 2016 to calculate the 2017 Earned Income Tax Credit and Child Tax Credit.

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