Flood Victims May Get Additional Tax Relief
Not a lot was done right after Hurricane Katrina but Congress did step in with some disaster relief that include tax breaks for victims and tax incentives for those to give to charities assisting victims. Congress passed similar legislation for victims of other disaster areas, including those who suffered through catastrophic hurricanes and tornados.
Why re-invent the wheel? Today, lawmakers from five Midwestern states introduced a similar measure in Congress to aid victims of the recent violent storms and flooding.
If the plan passes, it would allow disaster victims take money out of retirement plans without paying a tax penalty - the money would presumably be used for home repairs and other necessities not covered by FEMA. The bill would also give tax breaks to businesses that suffered losses and, most significantly in an era of “charity burnout” encourage more taxpayers to make donations to charities.
As written, the plan would apply to those areas declared federal disaster areas in the midwest and in the south. This includes areas in Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska and Wisconsin.
The IRS had already granted disaster relief for taxpayers in affected areas of Illinois, Indiana, Iowa, Nebraska, West Virginia and Wisconsin for the most recent storms. Earlier this spring, the IRS extended similar relief to storm victims in parts of Arkansas, Colorado, Georgia, Maine, Mississippi, Missouri and Oklahoma.
