Reuters: Regulatory News: IRS eases tax bite for Americans hurt by hurricane

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IRS eases tax bite for Americans hurt by hurricane Nov 1st 2012, 22:43 WASHINGTON | Thu Nov 1, 2012 6:43pm EDT WASHINGTON Nov 1 (Reuters) - Taxpayers in 11 states slammed by Sandy have something to look forward to as they recover from the storm damage: relief from the Internal Revenue Service. The massive storm, which killed at least 93 people by Thursday afternoon, has been declared a "qualified disaster" by President Barack Obama. Workers who receive storm-related compensation from their employers will not face a tax liability. These payments can include a range of expenses, including funeral costs, which are not already covered by insurance. The tax relief extends to certain payments from charities, state programs and the Federal Emergency Management Agency. There are no additional IRS forms to fill out for the tax relief, said William Jewett, a partner with Ropes & Gray LLP. "The last thing these people need who are being helped out by their employer is tax reporting and withholding," Jewett said. Businesses that make these payments can deduct the compensation expense from their tax bills. This relief was put in the tax code after the Sept. 11, 2001, attacks. Additionally, taxpayers who need cash quickly for storm repairs can borrow from 401(K) retirement savings in certain circumstances without the usual penalties. Separately, the IRS said on Wednesday that payroll and excise taxes due on Oct. 31 would be delayed until Nov. 7. Link this Share this Digg this Email Reprints

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