The recent wildfires in California have caused significant damage, disrupting the lives of individuals and businesses across the state. Recognizing this, the IRS has announced tax relief measures to help those affected. If you or your business has been impacted, this detailed guide explains how the IRS’s provisions can offer support and what steps you need to take.
Key Relief Measures
The IRS has extended various tax filing and payment deadlines for individuals and businesses affected by the California wildfires. Here’s a breakdown of the essential details:
Extended Deadlines
Taxpayers now have until October 15, 2025, to file their federal individual and business tax returns and make payments.
This extension covers:
Individual income tax returns normally due on April 15, 2025.
2024 contributions to IRAs and Health Savings Accounts (HSAs).
2024 quarterly estimated tax payments due on January 15, April 15, June 16, and September 15, 2025.
Quarterly payroll and excise tax returns normally due on January 31, April 30, and July 31, 2025.
Calendar-year partnership and S corporation returns due March 17, 2025.
Tax-exempt organization returns due May 15, 2025.
Penalties on payroll and excise tax deposits due from January 7, 2025, to January 22, 2025, will also be waived, provided the deposits are made by January 22, 2025.
Casualty Loss Deductions
Individuals and businesses in the federally declared disaster area can claim uninsured or unreimbursed disaster-related losses on their 2024 or 2025 tax returns.
To claim these losses:
Use Form 4684, Casualties and Thefts.
Include the FEMA disaster declaration number 4856-DR on your return.
For more details, refer to Publication 547, Casualties, Disasters, and Thefts.
Special Rules for Retirement Plans
Taxpayers may take special disaster distributions from their retirement plans without incurring the usual 10% early distribution penalty.
These distributions can also be spread over three years for tax purposes.
Participants may also be eligible for hardship withdrawals, depending on their plan’s guidelines.
Qualified Disaster Relief Payments
Payments received from government agencies to cover personal, family, or living expenses are excluded from gross income.
These payments also cover repairs to homes and replacements of damaged property. Refer to Publication 525, Taxable and Nontaxable Income for specifics.
Who Qualifies for Relief?
The IRS automatically applies this relief to taxpayers whose IRS address of record is in the disaster area. Here are the categories of eligible individuals:
Residents and Businesses in Los Angeles County
The relief automatically applies to individuals and entities with addresses within the covered disaster area.
Taxpayers Outside the Disaster Area
If your records required to meet tax obligations are in the disaster area, you qualify for relief. Contact the IRS at 866-562-5227 to request it.
Relief workers affiliated with government or recognized philanthropic organizations also qualify.
What to Do if You Receive a Penalty Notice
If you are eligible for relief but receive a late filing or payment penalty notice:
Call the number on the notice to explain your situation.
The IRS will abate penalties for affected taxpayers.
Additional Provisions
Free Copies of Tax Returns
Affected taxpayers can request previously filed tax returns without usual fees by including the FEMA disaster number 4856-DR on Form 4506 or Form 4506-T.
Other Time-Sensitive Actions
Taxpayers have until October 15, 2025, to complete certain time-sensitive acts, such as filing Form 5500 series or completing like-kind exchanges.
Steps to Take
Review your eligibility for relief on the IRS’s Disaster Assistance and Emergency Relief page.
Ensure your address of record with the IRS reflects your location in the disaster area.
Keep detailed records of disaster-related losses and recovery expenses.
Consult with a tax professional to ensure all eligible benefits are claimed. Disclaimer Every taxpayer’s situation is unique. The above information is a general guide and may not cover all scenarios. For personalized assistance or to explore how this relief applies to you, contact us
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