PPS Tax Preparer Courses- All About the Debby Victim Tax Relief

The Internal Revenue Service (IRS) announced disaster tax relief today for individuals and businesses in parts of Pennsylvania affected by Tropical Storm Debby.

Affected taxpayers now have until February 3, 2025, to file various federal individual and business tax returns and make tax payments. This relief mirrors that provided to other states impacted by the storm.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this includes Lycoming, Potter, Tioga, and Union counties in Pennsylvania.

Individuals and businesses located in these counties qualify for tax relief, which will also apply to any additional counties designated later. A current list of eligible localities can be found on the IRS's Tax Relief in Disaster Situations page.

Filing and Payment Relief

This tax relief postpones various filing and payment deadlines beginning August 9, 2024, through February 3, 2025. Consequently, affected individuals and businesses have until February 3, 2025, to file returns and pay taxes originally due during this period.

This means the February 3, 2025, deadline applies to:

• Any individual, business, or tax-exempt organization with a valid extension to file their 2023 federal return. However, payments due on these returns are not eligible for the extension, as they were due before the storm.

• Quarterly estimated income tax payments normally due on September 16, 2024, and January 15, 2025.

• Quarterly payroll and excise tax returns due on October 31, 2024, and January 31, 2025.

Additionally, penalties for failing to make payroll and excise tax deposits due from August 9, 2024, to August 26, 2024, will be waived, provided the deposits are made by August 26, 2024.

Details about other tax-related actions eligible for relief during the postponement period can be found on the IRS's Disaster Assistance and Emergency Relief page.

The IRS automatically provides filing and penalty relief to taxpayers with an IRS address in the disaster area, meaning they do not need to contact the agency for this relief.

Taxpayers without an IRS address in the disaster area—such as those who moved there after filing their return—may receive penalty notices for the postponement period. In such cases, they should contact the number on the notice to request penalty relief.

The IRS will also assist taxpayers living outside the disaster area but whose necessary records for meeting deadlines during the postponement period are located in the affected area. These taxpayers should call the IRS at 866-562-5227 for assistance. This also applies to workers aiding in relief efforts affiliated with recognized organizations. Tax preparers with clients outside the disaster area can use bulk requests for disaster relief.

Additional Tax Relief

Individuals and businesses in federally declared disaster areas who suffered uninsured or unreimbursed losses can claim these on either the return for the year the loss occurred (the 2024 return) or the prior year (the 2023 return). Taxpayers have up to six months after their federal income tax return due date to make this election, which means individual taxpayers have until October 15, 2025. Be sure to include FEMA declaration number 4815-DR on any return claiming a loss. Refer to Publication 547, Casualties, Disasters, and Thefts, for more information.

Qualified disaster relief payments are generally excluded from gross income, allowing affected taxpayers to exclude amounts received from government agencies for necessary living expenses, home repairs, or replacement of contents. For details, see Publication 525, Taxable and Nontaxable Income.

Additional relief may also be available for taxpayers participating in retirement plans or IRAs. This includes the option for special disaster distributions, which would not incur the additional 10% early withdrawal tax and allow income to be spread over three years.

The IRS may provide further disaster relief in the future.

This tax relief is part of a coordinated federal response to the damage caused by the storm, based on local assessments by FEMA. For disaster recovery information, visit DisasterAssistance.gov.