I have several family members who live in Houston and the outer lying areas. Floodwaters rose and threatened their homes. My dad’s oxygen tank was cut-off with the electricity. A call to 911 yielded an answering machine that prompted them to leave a message and get in the queue. My sister (a nurse) and her husband were pulling equipment off a shoreline to save their business. A call came and she was mandated to work for 3 days. What a nightmare!
My family was fortunate. Two good Samaritans showed up with a generator for my father. They had heard, through social media, that there was need. The generosity of total strangers brings me to tears of total gratitude. My dad’s car was underwater and he will not be able to move back to his home for several weeks. My sister and brother had no losses.
Not every family is as blessed as ours is. Do you know someone effected by Hurricane Harvey? The IRS and the Department of Labor have made several announcements for various tax and retirement plan rules for those who are struggling with the disastrous aftermath of the hurricane.
There are ways that you may be able to help. Here are a few:
- Loan or hardship distributions can be made to Harvey Victims whose principal place of residence or employment was located in the federally declared disaster area, or whose parents/grandparents, children/grandchildren, dependents, or spouse had a principal place of residence or employment in the federally declared disaster area. These procedures are in effect until January 31, 2018. For a complete list of eligible counties, visit https://www.fema.gov/disasters. IR-2017-138
Note: This is for qualified plans only! Money taken from an IRA is still subject to tax and applicable 10% penalties.
- If employees, anywhere in the US, have vacation, sick leave, or personal leave time, they may forgo the benefit in exchange for cash payments made to charitable organizations who are providing relief to victims of the disaster. Under this special relief, the donated leave will not be included in their income or wages. Employers are permitted to deduct the cash payments as business expenses. This must be done prior to January 1, 2019. Details of this relief are in Notice 2017-48, posted today on IRS.gov. IR-2017-143
- If victims have not completed their 2016 tax return, they have until January 31st to file. IR-2017-135,
- For Legal Guidance, please see: Announcement 2017-11,
- For a more comprehensive list of relief measures, the IRS has consolidated all notices in one place on their website at irs.gov/hurricaneharvey.
- Please be wary of Fake Charity Scams. You could lose both your money and the tax deduction! Before you give to a charity, please refer to: IR-2017-137.
As of this writing, Hurricane Irma is headed toward the U.S. and may be as strong a storm as Hurricane Harvey. If that is the case, we should expect to see the same forms of relief for Irma’s victims as we have for Harvey’s victims.
If you have questions or concerns, please do not hesitate to reach out.
Barbara Norman, CFP®, ChFC®