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An Overview of Financial Relief Measures for Helene and Milton Victims

Thousands of people throughout the southeastern United States are working to rebuild in the aftermath of Hurricanes Helene and Milton.

The Internal Revenue Service (IRS) has announced certain disaster tax relief for individuals and businesses affected by Hurricanes Helene and Milton in the states of Alabama, Georgia, North Carolina and South Carolina, Florida, Tennessee and Virginia.

Filing and Payment Relief

The tax relief provided is for those various and tax and filing deadlines that occur beginning on September 22, 2024 for Alabama; September 23 for Florida; September 24 for Georgia; September 25 in North Carolina, South Carolina and Virginia; and September 26 for Tennessee (Collectively, the “Original Due Dates”). For all these states, the relief period ends on May 1, 2025. This means, affected individuals and businesses will now have until May 1, 2025 to file returns and pay any taxes that were originally due between each Original Due Date through May 1, 2025. For more details for each state see IRS announcement IR-2024-266.

General Tax Relief

Individuals and businesses in these federally declared disaster areas who suffered uninsured or unreimbursed disaster-related losses can choose to claim such losses in the same year occurred or in the prior tax year. For more information on this topic see IRS Publication 547, Casualties, Disasters, and Thefts.

Hardship Withdrawals from Retirement Plan or Individual Retirement Accounts

Affected individuals may also find some help and relief from the SECURE 2.0 Act of 2022’s special rules for distributions from retirements plans and IRAs, as well as for retirement plan loans. In general, these special rules may provide affected individuals to cash in these difficult times. More specifically, Secure 2.0 provided the following:

  • Expanded distribution and tax relief – Expanded distribution options and favorable tax treatment for up to $22,000 of qualified disaster recovery distributions from eligible retirement plans to qualified individuals, as well as special rollover and repayment rules with respect to such distributions.
  • Relief to repay distributions taken for principal residence purchase/construction – The ability for an individual to repay a first-time homebuyer from an IRA or a hardship withdrawal from a section 401(k) or 403(b) plan if the distribution was to be used to purchase or construct a principal residence in a qualified disaster areas but was not so used because of a qualified disaster.
  • Plan Loan Relief – Increased limit on the amount a qualified individual may borrow from the individual’s account under an eligible retirement plan (not including an IRA). An employer may also provided qualified individual up to an additional year to repay their plan loans.

These special rules are notable because without them, such withdrawals may be subject to the 10% early distribution penalty, as well as additional federal income taxes. Prior to Secure 2.0, there was no disaster relief allowing these distributions and loans that apply for all major disasters; instead, Congress would enact relief on a disaster-by-disaster or year-by-year basis.

For more information regarding this potential early withdrawal/distribution relief provided through a retirement plan or IRA, see Disaster relief frequently asked questions: Retirement Plans and IRAs under the Secure 2.0 Act of 2022.

For information on how to assist members of your workforce who have been impacted by hurricanes and other disasters, consider reading this article: Responding in the Face of Crisis: 3 Steps to Support Employees.

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