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Tax Relief for Fire Victims

IRS Announces Tax Relief for Individuals and Businesses in California Affected by Wildfires and Straight-Line Winds

The Internal Revenue Service (IRS) announced in January that individuals and businesses in parts of California affected by wildfires and straight-line winds beginning on January 7, 2025, will receive tax relief. Affected taxpayers now have until October 15, 2025, to file federal tax returns and make payments for various individual and business taxes.

As a side note, the Franchise Tax Board (FTB) has also granted taxpayers in Los Angeles County a postponement to October 15, 2025, to file California tax returns on 2024 income. This postponement also applies to tax payments that would have been due January 7, 2025, through October 15, 2025.

Getting back to the IRS announcement, this relief follows the disaster declaration issued by the Federal Emergency Management Agency (FEMA). As a result, individuals and businesses located in Los Angeles County qualify for extended filing and payment deadlines. Specifically, taxpayers whose filing or payment deadlines fall between January 7, 2025, and October 15, 2025, will be granted additional time to file and pay.

Key Deadlines and Relief:

  • Individual Tax Returns: Taxpayers have until October 15, 2025, to file returns and make payments originally due on April 15, 2025.
  • Estimated Tax Payments: The 2024 estimated tax payment due on January 15, 2025, along with subsequent payments due on April 15, June 16, and September 15, 2025, are postponed to October 15, 2025.
  • Payroll and Excise Tax Deposits: Penalties for payroll and excise tax deposits due between January 7, 2025, and January 22, 2025, will be abated if deposits are made by January 22, 2025.

Business Tax Deadlines Extended:

  • Payroll and Excise Tax Returns: Quarterly returns due on January 31, April 30, and July 31, 2025, will be postponed to October 15, 2025.
  • Partnership and S Corporation Returns: Due on March 17, 2025, are extended to October 15, 2025.
  • Corporation and Fiduciary Returns: Due on April 15, 2025, are extended to October 15, 2025.
  • Tax-Exempt Organization Returns: Normally due on May 15, 2025, will be extended to October 15, 2025.

If any affected taxpayer receives a late filing or payment penalty notice, they should call the IRS at the number provided in the notice to request penalty abatement.

Who Qualifies for Relief?

Taxpayers in the covered disaster area, as designated by FEMA, are eligible for this relief. This includes individuals and businesses located in the disaster zone, as well as those whose records are affected by the disaster. Relief also extends to relief workers affiliated with recognized government or philanthropic organizations.

Casualty Losses

Affected taxpayers can claim disaster-related casualty losses on their tax return for the year the event occurred or the previous year. Personal property losses not covered by insurance or other reimbursements may also be deductible. Affected taxpayers should reference the FEMA disaster declaration number (4856-DR) when filing their claim. I will be providing more information later on deducting casualty losses.

Additional Relief

  • The IRS will waive fees for copies of tax returns for affected taxpayers. To request a copy, submit Form 4506 or Form 4506-T with the FEMA declaration number (4856-DR) written in bold at the top.
  • Qualified disaster relief payments are generally excluded from gross income, including those for personal, family, living, or funeral expenses, as well as for home repairs and replacement of contents.
  • Taxpayers may be eligible for special disaster distributions from retirement plans or IRAs, which could allow for tax-free withdrawals or relief from early withdrawal penalties. Specific rules apply for each type of account.

Future Relief

The IRS may provide additional disaster relief in the future. Affected taxpayers who are contacted by the IRS regarding collections or examinations should explain how the disaster has impacted them to receive appropriate consideration.

Taxpayers can find additional information and download necessary forms from the official IRS website at IRS.gov.