Individuals and businesses are still feeling the effects of hurricanes Harvey, Irma and Maria. A new law aims to help hurricane victims with a variety of tax relief measures and incentives, including an employee retention credit.
President Trump signed the Disaster Tax Relief and Airport and Airway Extension Act of 2017 into law (P.L. 115-63) on September 29, providing emergency tax relief for individuals and employers in areas affected by hurricanes Harvey, Irma and Maria.
For businesses, the largest impact will likely come from a new employee retention tax credit. Companies with the principal place of employment in one of the disaster zones could receive a credit for up to $2,400 per each employee. The tax credit equals 40% of the first $6,000 of wages incurred or paid to employees for each day the business was inoperable as a result of the hurricanes from September 5, 2017, to December 31, 2017. The credit is not affected if the employee reports to work at another location while the business is inoperable. If the business is not able to claim the retention credit for 2017, it can carry the credit for 20 years.
For individual taxpayers, the biggest change in the new law is the removal of the current legal requirement that personal casualty losses must exceed 10 percent of adjusted gross income to qualify for deduction.
Other changes include the temporary removal of limitations on charitable deductions related to qualified hurricane relief donations given before December 31, 2017. The measure also provides an exception to the 10 percent early retirement plan withdrawal penalty for qualified hurricane relief usage.
On October 3, U.S. Senator Bill Nelson of Florida filed a bill calling for additional tax relief measures for individuals and small businesses. Nelson’s bill contains provisions to assist citrus growers across Florida by allowing them to deduct hurricane-related clean-up costs, as well as extending tax breaks to victims in Puerto Rico and other U.S. territories.
Not sure how these tax relief measures and incentives apply to you and your business? Contact your Kaufman Rossin tax professional to learn more.
Scott F. Berger, CPA, is a tax and entrepreneurial services principal in Kaufman Rossin’s Boca Raton office. Kaufman Rossin is one of the top CPA and advisory firms in the U.S. Scott can be reached at firstname.lastname@example.org.