The members of the North Bay Enrolled Agents and the members of CSEA mourn with our neighbors the losses incurred with the California wildfires. We can’t turn back time but what we can do is bring you the latest tax information available on dealing with this loss. We will be adding information on how to deal with the requirements for reporting this loss as well as any relevant information we find to help you through this period. We will provide links to additional resources that may be appropriate.

Latest Tax Information for Victims of California Disasters

Federal Tax Relief may be coming to Settlement Recipients

Congress has announced it has reached a budget deal that includes Federal tax relief for individuals who received settlement income related to wildfires. As of this writing, the bill has not passed yet, but assuming it does, The Tax Relief for American Families and Workers Act of 2024 will provide:

Extension of Rules for Treatment of Certain Disaster-Related Personal Casualty Losses
The Taxpayer Certainty and Disaster Tax Relief Act of 2020 provided tax relief to certain individuals in qualified disaster areas. The relief included special rules for qualified disaster related personal casualty losses, including eliminating the requirement that casualty losses must exceed 10 percent of adjusted gross income (AGI) to qualify for the deduction, requiring losses to exceed $500 per casualty in order to be deductible, and allowing taxpayers to claim the casualty loss deduction “above the line,” i.e., without itemizing their deductions.

This section extends the rules for the treatment of certain disaster-related personal casualty losses as passed in the Taxpayer Certainty and Disaster Tax Relief Act of 2020, including any area with respect to which a major disaster was declared by the President during the period beginning on January 1, 2020, and ending 60 days after the date of enactment of the proposal if the incident period of the disaster (as specified by the Federal Emergency Management Agency as the period during which the disaster occurred) begins on or after December 28, 2019, and on or before the date of enactment of the proposal.

Exclusion From Gross Income for Compensation for Losses or Damages Resulting From Certain Wildfires

In general, gross income is defined as income from whatever source derived. This section excludes from gross income any amount received by or on behalf of an individual as a qualified wildfire relief payment. It defines “qualified wildfire relief payment” as any amount received by or on behalf of an individual for expenses, damages, or losses incurred as a result of a qualified wildfire disaster, but only to the extent any expense, damage, or loss is not compensated for by insurance or otherwise. This section also includes provisions to deny double benefits.

This section applies only to qualified wildfire relief payments received by an individual during taxable years beginning after December 31, 2019, and before January 1, 2026.

Once we get the actual Internal Revenue Code we can confirm how and who this will benefit.

New Disaster Relief for many Californians

For Federal Income Tax Returns The IRS announced that taxpayers who live in counties designated by FEMA as disaster areas because of the January 2023 storms now have more time to file and pay their Federal Income Tax Returns. As of the date of this writing eligible...

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Tax Relief for California Storm Victims

The IRS has announced that due to the winter storms, most individuals in California will have more time to file and pay. California conforms to this postponement. WHO CAN GET RELIEF If you live or work in the disaster area you are eligible for this tax relief, you do...

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General Disaster Tax Relief Information

IRS

IRS Disaster Resource Guide for Individuals and Business – This resource guide provides information to individuals and businesses affected by a federally declared disasters.

Casualty Losses for Tax Years 2018 through 2025 (No easy to read guidance has been published yet. This is a link to the code section.  Sec. 165(h)(5) was added as part of the Tax Cuts and Jobs Act limiting personal casualty losses unless taxpayer is in a Federally Declared Disaster).

FEMA Declared Disasters

Franchise Tax Board

Disaster Loss and your CA state income tax

List of California Disasters

 

California Department of Tax and Fee Administration (formerly the SBOE)

Emergency tax or fee relief is available from the CDTFA for business owners and feepayers directly affected by disasters declared as state of emergencies

 

 

Flyer to provide at meetings, info sessions and shelters

Flyer

Property Tax Reassessments

Employment Development Department (EDD)

California EDD provides a variety of services to individuals and businesses affected by disasters in California

 

 

Federal Disaster Assistance Resources

Federal Disaster Assistance – The Disaster Assistance Improvement Program’s (DAIP) mission is to provide disaster survivors with information, support, services, and a means to access and apply for disaster assistance through joint data-sharing efforts between federal, tribal, state, local, and private sector partners

Contact Information

North Bay Enrolled Agents (NBEA)

North Bay Enrolled Agents logoEnrolled Agents (EAs) are federally-licensed tax practitioners who may represent taxpayers before the IRS when it comes to collections, audits and appeals. As authorized by the Department of Treasury’s Circular 230 regulations, EAs are granted unlimited practice rights to represent taxpayers before IRS and are authorized to advise, represent, and prepare tax returns for individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements. Enrolled agents are the only federally-licensed tax practitioners who specialize in taxation and have unlimited rights to represent taxpayers before the IRS. The enrolled agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department. Enrolled agents’ expertise in the continually changing field of taxation enables them to effectively represent taxpayers at all administrative levels within the IRS.

NBEA is the North Bay Chapter of the California Society of Enrolled Agents.