Tax Break Bill For Hurricane Michael Victims Still In The Works

News Herald (Panama City, FL)

Feb. 18--PANAMA CITY -- Federal lawmakers have introduced a bill to offer certain tax breaks to people impacted by Hurricane Michael.

The House bill, filed last week and expected to be signed into law within a few weeks, would provide penalty-free early access to retirement savings and make it easier to qualify for personal casualty loss deductions. The bill would also provide tax relief to help businesses retain employees and let taxpayers refer to earned income from the previous year for determining earned income tax credits and child tax credits.

Co-sponsored by Rep. Neal Dunn, R-Panama City and Rep. Tom Rice, R-South Carolina, The Natural Disaster Tax Relief Act of 2018 includes tax relief for those impacted by Hurricane Michael and other recent disasters like Hurricane Florence and the Camp and Woolsey wildfires.

Dunn had first introduced similar tax relief legislation just for Hurricane Michael victims late last year, but the bill failed to make it to the floor before the last session ended. Dunn said he then decided to attach the bill to a larger one when the next legislative session started.

"The best chance to get it passed is by putting it on a larger bill," Dunn said. "Getting smaller bills taken up and passed is a little harder."

If it passed, the bill would retroactively apply to 2018 and then include the 2019 and 2020 tax seasons. The bill is set up to give a three-year window from the year of the storm for people to draw from funds.

"I've heard from and visited with many of our members from the area ... they tell me that there is a real need for this relief and it would help many of their clients as the community works to get back on their feet," Deborah Curry, president and CEO of the Florida Institute of CPAs, wrote in an email to The News Herald. "The ability to access personal funds without incurring penalties is a real benefit as is tax relief for casualty losses."

Curry said that relief for casualty losses would be particularly helpful for taxpayers.

"Every dollar that affected taxpayers can put toward the repair of their homes and businesses is extremely beneficial," Curry wrote.

Curry added that currently, hurricane-impacted taxpayers who do not itemize deductions will not realize tax savings associated with a casualty loss.

"If Congressman Dunn's law passes, then taxpayers will be able to increase their standard deduction by the net disaster loss," Curry wrote. "Consider single parents and low wage earners that are not able to itemize, but instead claim the standard deduction ... if the bill passes, they will be able to add their net casualty loss to their standard deduction."

Curry wrote that withdrawing funds from a qualified plan or individual retirement account without penalty would be useful. She said taxpayers could withdraw those funds immediately.

"This can be very important while taxpayers are waiting for insurance reimbursements ... or awaiting receipt of government assistance," Curry wrote. "Many of the relief items included in the bill are similar to those that we've seen afforded disaster areas in previous years and it seems reasonable that they should apply to those impacted by Hurricane Michael now."

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