Congress Passes Disaster Tax Relief and Airport & Airway Extension Act of 2017

In the wake of the recent hurricane devastation, Congress passed H.R. 3823 – Disaster Tax Relief and Airport and Airway Extension Act of 2017, and it was signed into law by President Trump on September 29, 2017.

Part V of the act, subtitled “Tax Relief for Hurricanes Harvey, Irma, and Maria”, first defines the Disaster Zone of each hurricane-that is, the portion of the disaster area determined to warrant individual or individual and public assistance from the federal government-and then offers tax relief in the following areas:
  • Retirement Funds – allows for individuals to withdraw money penalty-free or take out a greater loan (not treated as a distribution) from their eligible retirement plan in order to fund rebuilding a home or repairing property damage. Also extend repayment terms for the aforementioned loans.
  • Employment Subsidizing – helps share the cost of employees up to $6,000 per year during the rebuild phase.
  • Charitable Giving – allows individuals and businesses in Texas, Florida, Louisiana, Puerto Rico, and the Virgin Islands the ability to deduct more for charitable giving.
  • Casualty Losses – special rules for qualified disaster-related personal casualty losses.
  • Earned Income Tax Credit – allows the previous year’s records to be used to determine earned income for the purpose of the EITC for those temporarily laid off due to the storms.
  • Child Tax Credit – allows for the use of past records to maintain uninterrupted support via the child tax credit in the case of current records being unavailable due to the hurricanes.
  • Modifies requirements for purchasing flood insurance – requires that federally-backed mortgages have flood insurance if they are in flood hazard areas and reinforces that private flood insurance counts as valid flood insurance as long as that policy is state-approved, which increases the availability of flood insurance in high-risk areas.
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