Jan
While there are obviously very few things that republicans and democrats agree on these days relief for the victims of Hurricane Sandy seems to be one of them.
Within the last few weeks both senate democrats and a bipartisan group of congressmen said they would introduce legislation that would provide relief to victims of Hurricane Sandy.
Both plans offer the following
Allowance for a full deduction for expenses incurred as a result of disaster cleanup rather than classifying such expenses as capital improvements.
Waive the present-law requirement that net casualty losses exceed 10% of Adjusted Gross Income (AGI) before they are deductible for federal income tax purposes.
Some adjustment to the 50%-of-AGI limitation of charitable contributions for qualified disasters. Currently cash contributions cannot exceed 50% of a taxpayers’ AGI. The senate bill proposes doing away with the 50% limit relating to these donations while the house bill allows for a carry forward of contributions that exceed the 50% limit for 5 years.
The senate bill provides a credit for disaster-damaged businesses that continued to pay their employees’ wages regardless of whether they performed services. The house bill proposes to provide businesses in the Hurricane Sandy Disaster Area with a tax credit for hiring workers who lost their job as a result of Hurricane Sandy.
Allow disaster victims a five-year carryback for net operating losses attributable to Hurricane Sandy.
Increased Sec 179 (first year expensing) for businesses affected by the storm.
Waiver of the 10% early distribution penalty normally assessed to taxpayers that withdraw money from a retirement plan before age 59 ½. The maximum amount that could be withdrawn is $100,000.
While the two bills are similar in many aspects you must keep a close eye on the final legislation. It is almost certain that some relief act will be passed but because of the ongoing fiscal cliff negotiations and budget concerns any of the above provisions may be modified or completely deleted from the final bill.
Conclusion
This article addresses the possible future legislation surrounding Hurricane Sandy victims. I have stated above and will do so again here; these provisions are not anywhere near completed. I wrote the article to alert people that there will be some relief but as always I strongly urge that you consult a tax professional that is current with all of the most recent legislation.