As of this writing, around 150 federal disaster declarations have already been announced for 2024, involving 44 states, two territories, and half a dozen Native American tribes or bands. Hurricane Helene resulted in greater loss of life than any natural disaster since Hurricane Katrina.
After the immediate needs of those affected by disasters for shelter, food, water and communications are met, taxpayers look for help in rebuilding their lives. Both Congress and the Internal Revenue Service have acted to provide tax assistance in response to these disasters.
IRS filing and payment extensions
The IRS routinely issues information releases in response to federal disaster declarations highlighting the tax relief available. This relief includes an extension of filing and payment deadlines for those in the area of the disaster declarations.
In Information Release 2024-253, the IRS addressed tax relief for the Helene disaster declarations. Those disaster areas include the entire states of Alabama, Georgia, North Carolina and South Carolin and 41 counties in Florida, eight counties in Tennessee, and six counties and one city in Virginia. Additional disaster declarations for Hurricane Helene are still possible.
These taxpayers now have until May 1, 2025, to file various federal individual and business tax returns and make tax payments. This includes 2024 individual and business returns normally due during March and April 2025; 2023 individual and corporate tax returns with valid extensions; and quarterly estimated tax payments. It also includes estimated tax payments, quarterly payroll tax returns, and excise tax returns.
The IRS also stated that taxpayers who were already under filing and payment extensions for Tropical Storm Debby and are in the Helene disaster area now are further postponed to May 1, 2025.
The beginning effective date for this extended deadline for disaster relief for Hurricane Helene varies slightly with each disaster declaration: Sept. 22, 2024 in Alabama; Sept. 23 in Florida; Sept. 24 in George; Sept. 25 in North Carolina, South Carolina, and Virginia; and Sept. 26 in Tennessee.
The IRS will automatically provide filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. The service has specified procedures for other taxpayers who had their records in the disaster area but not their address, who recently moved into the area, or who had tax clients outside of the disaster area to obtain relief.
Casualty loss deductions
In addition to filing and payment extensions, the Tax Code provides a casualty loss deduction for uninsured or unreimbursed federal disaster-related losses.
If the property is personal-use property or is not completely destroyed, the amount of the casualty loss is the lesser of the adjusted basis of the property or the decrease in the fair market value of the property as a result of the casualty. If the property is business or income-producing property, such as rental property, and is completely destroyed, then the amount of the loss is the adjusted basis minus any salvage value, insurance or other reimbursement received or expected to be received.
A casualty loss deduction is claimed as an itemized deduction on Schedule A of Form 1040. Even taxpayers who usually claim the standard deduction rather than itemized deductions may have a large enough casualty loss to warrant itemizing deductions. For property held for personal use, $100 must be subtracted from each casualty event after subtracting any salvage value and any insurance or other reimbursement. All such casualty amounts are then totaled, and 10% of the taxpayer’s adjusted gross income is subtracted from that amount to total the allowable casualty loss deduction for the year.
Route 9 in the aftermath of Hurricane Helene in Bat Cave, North Carolina, on Oct. 1.
Sean Rayford/Photographer: Sean Rayford/Getty
Generally, casualty losses are deductible in the year the loss is sustained, which is generally in the year the casualty occurred. A loss is not considered to have been sustained if there is still a reasonable prospect of recovery through a claim for reimbursement. However, very importantly to potentially get more rapid access to funds to speed recovery, a taxpayer can choose to treat the casualty loss as having occurred in the year immediately preceding the tax year in which the disaster loss was sustained, by filing an amended tax return even if the return for that year has already been filed. This can result in a more rapid refund than waiting to claim the casualty loss deduction when the 2024 tax return is filed in 2025.
Congress has in the past sometimes adopted special relief provisions with respect to casualty losses and specific disaster periods but has not yet done so for 2024 disasters.
Access to retirement funds
If the taxpayer has a retirement plan that permits hardship withdrawals, the taxpayer may be able to withdraw funds from the retirement plan penalty-free, with the right to repay the funds to the plan within three years or to spread the tax due on the withdrawn funds over three years.
Starting in 2024, a retirement plan may also permit a taxpayer to make an emergency withdrawal of up to $1,000 penalty-free.
Exclusion for relief payments
Qualified disaster relief payments from a government agency for necessary disaster-related expenses may generally be excluded from taxable income.
Summary
As of this writing, additional hurricanes are still threatening the East and Gulf Coasts, and wildfires continue to burn in the West. The number of federally declared disasters for 2024 is likely to continue to grow. As it has sometimes done in the past, Congress may, after the November elections, pass legislation that may include some additional tax relief for 2024 disasters.
The House Financial Services Committee is considering draft legislation that would transfer the responsibilities of the Public Company Accounting Oversight Board to the Securities and Exchange Commission.
The bill would also end the support fees that public companies and broker-dealers pay to support the PCAOB. “The proposal would transfer the authorities of the PCAOB to the SEC,” said a spokesperson for the committee. “It modifies PCAOB’s authority to collect and spend accounting support fees and directs fees to be remitted to Treasury.” The PCAOB did not immediately respond to a request for comment.
The bill might be included in the larger tax and spending reconciliation bill that’s currently making its way through Congress, according to the Financial Times. The PCAOB has come under criticism from Republicans, including the new chairman of the SEC, Paul Atkins, who was confirmed by the Senate last week. He was listed as a contributor to the Heritage Foundation’s Project 2025, which called for eliminating the PCAOB and rolling back SEC regulations, and was critical of the PCAOB while he was a commissioner.
Under the draft legislation, all intellectual property retained by the PCAOB in support of its programs for registration, standard-setting and inspection would be shared with the SEC and any pending enforcement and disciplinary actions of the Board would be referred to the SEC or other regulators in accordance with Section 105 of the Sarbanes-Oxley Act of 2002.
The Sarbanes-Oxley Act originally established the PCAOB in response to a wave of accounting scandals in the early 2000s involving Enron, WorldCom and other companies.
Effectively on the transfer date from the PCAOB to the SEC, all unobligated fees collected under Section 109(d) of the Sarbanes-Oxley Act would be transferred to the general fund of the Treasury, and the SEC would not be able to collect fees under that section. The duties and powers of the PCAOB in effect as of the day before the transfer date, other than those described in Section 107 of Sarbanes-Oxley, would be transferred to the SEC. That section already grants the SEC general oversight of the PCAOB and the power to review the Board’s actions, including general modification and rescission of Board authority.
The draft legislation says, however, the SEC may not use funds to carry out Section 107 of Sarbanes-Oxley Act for activities related to overseeing the Board. The PCAOB would have to transfer all intellectual property to the SEC, along with existing processes and regulations of the Board, including existing PCAOB auditing standards. Those would continue in effect unless they were modified through rulemaking by the SEC; and any reference to the PCAOB in any law, regulation, document, record, map, or other paper of the United States would be deemed to be a reference to the SEC.
Any PCAOB employee as of the date of enactment of the bill may be offered equivalent positions on the SEC staff, as determined by the Commission, and submit to the Commission’s standard employment policies; and receive pay no higher than the highest paid employee of similarly situated employees of the Commission, according to the draft legislation. That provision could in effect lower the salaries of PCAOB board members, who are some of the highest paid employees in the federal government.
The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.
The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.
In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.
President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.
The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings.
Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.
Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.
Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed.
The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.