President Biden has signed HR 5863 which excludes the PG&E Fire Victims Trust payments from Federal income for most taxpayers. (Note: California already excluded the payments from income so this bill covers Federal taxes only).
Key features of the law:
- If an individual received a qualified wildfire relief payment in calendar years 2020 through 2025, it may be excluded from income.
- A qualified wildfire relief payment is any amount received by an individual as compensation for losses, expenses, or damages, personal injury, death, or emotional distress incurred as a result of a qualified wildfire disaster to the extent they were not compensated for by insurance/other.
- This tax relief applies to individuals. So payments received by a Partnership or Corporation likely do not qualify for this relief.
How to get your money back
- If you reported the FVT payment as income you can amend your prior year returns to get a refund.
- For most 2020 and 2021 returns you have until 12/12/25 to file an amended returns.
- For 2022 and 2023 returns the timing is determined by the normal refund statute of limitations rules.