Tax relief follows recent hurricanes

October 2005

 

The Hurricane Katrina Tax Relief Act of 2005, signed by President Bush on September 23, provides tax help not only to the victims of the recent disaster but also to those assisting in the recovery efforts. Here’s a quick summary of the main tax provisions in the new law, some of which may affect you.

* Deadlines for tax filings and tax payments are extended.

* The amount victims may borrow from their qualified plans is increased to $100,000, and the 10% early withdrawal penalty on retirement plan distributions is waived for storm victims. The income taxes due on withdrawals can be paid over three years, and if the money is returned to the plan, these taxes can be refunded.

* The work opportunity credit of up to $2,400 per new employee is available to employers who hire displaced workers. A “disaster employee retention credit” is available to employers who continue to pay workers in small businesses closed by the storm.

* To encourage charitable giving, certain deduction limits on contributions are suspended. Enhanced deductions are allowed for contributions of food and educational books. The standard mileage rate for charitable driving is increased from 14 cents a mile to 70% of the business mileage rate, effective through 2006.

* Those who provide housing to displaced nonfamily members qualify for a $500 deduction each for up to four individuals.

* Victims won’t be taxed on forgiven debt, and the limits on casualty loss deductions are eased. The tax- free period for replacing damaged property is extended to five years.

For additional information on this new legislation and its potential effect on you, give us a call.

Maniar, Miller & Wechsler, LLC
2855 N. University Drive, Suite 600
Coral Springs, FL 33065
Phone: 954-75 CPA-MM (752-7266)

Fax: 954-345-0115
info@cpa-mm.com