The recent wildfires in Los Angeles County have led to significant challenges for individuals and businesses alike. In response, both federal and state authorities have introduced tax relief measures to support those affected. Understanding these provisions is crucial for navigating the recovery process effectively.
Federal Tax Relief Measures
The Internal Revenue Service (IRS) has announced tax relief for individuals and businesses impacted by the Los Angeles wildfires that began on January 7, 2025. This relief extends to all areas designated by the Federal Emergency Management Agency (FEMA) as disaster zones, currently encompassing Los Angeles County.
Extended Filing and Payment Deadlines
Affected taxpayers now have until October 15, 2025, to file various federal individual and business tax returns and make tax payments. This extension applies to:
- Business Entities:
- Partnerships (Form 1065)
- S Corporations (Form 1120-S)
- C Corporations (Form 1120)
- Payroll and Excise Tax Returns:
- Quarterly payroll and excise tax returns normally due on January 31, April 30, and July 31, 2025.
- Estimated Tax Payments:
- 2024 estimated tax payment due on January 15, 2025.
- 2025 estimated tax payments due on April 15, June 16, and September 15, 2025.
The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. Affected taxpayers who reside or have a business outside the designated area but were impacted should call the IRS disaster hotline at 866-562-5227 to request tax relief.
State Tax Relief Measures
In alignment with federal provisions, the California Franchise Tax Board (FTB) has announced state-level tax relief for those affected by the Los Angeles wildfires. This includes:
- Extended Deadlines: California generally follows the IRS extended deadlines to file and pay taxes.
- Disaster Loss Deductions: Taxpayers affected by a presidentially declared disaster may claim a deduction for a disaster loss. The advantage of claiming the disaster loss on a tax year 2024 return is that FTB can issue a refund sooner.
Steps to Take for Tax Relief
If you or your business have been affected by the Los Angeles wildfires, consider the following actions to leverage available tax relief:
- Assess Eligibility: Determine if you are located within the designated disaster area or if your records are maintained there, as this affects eligibility for relief measures.
- Review Tax Obligations: Identify which tax filings and payments are impacted by the extended deadlines, including income, payroll, and excise taxes.
- Document Losses: Maintain thorough records of any disaster-related damages and expenses to support potential deductions and claims.
- Consult Professionals: Engage with tax professionals experienced in disaster-related tax provisions to ensure compliance and maximize relief benefits.
Additional Considerations
- Insurance Proceeds: Be aware that insurance reimbursements for damaged property may have tax implications. Proper reporting is essential to avoid future complications.
- Casualty Losses: The IRS allows for the deduction of casualty losses in federally declared disaster areas. Ensure you understand the criteria and documentation required to claim these deductions.
Dealing with taxes in the aftermath of a disaster can be challenging, but understanding IRS relief measures can provide significant benefits. From postponed deadlines to accessing retirement funds early, disaster-related tax relief can ease financial burdens and keep your business on track.
Contact us today for expert guidance and personalized support with your tax planning.
