Press Release
Posted:
Washington, DC – Today, Congressman Mike Thompson (CA-05) introduced a bill to deliver temporary tax relief to survivors of the California fires.
“The fires that tore through our California were the worst in our state’s history, leaving communities devastated. The bill I’m introducing today would bring important tax relief to those communities, giving them more tools to begin the process of rebuilding and recovering,” said Rep. Thompson. “Among other things, this legislation will make it easier for people to claim tax deductions for the cost of destroyed property, provide penalty-free access to retirement funds, and give tax credits to disaster-affected employers for wages they’ve paid to employees from disaster areas. This is a great first step to help our community rebuild and I look forward to working with my House colleagues on longer-term relief for the communities hit by these fires.”
The bill takes the following targeted actions to help families and communities impacted by the fires:
Deduction for Personal Casualty Losses:
- With respect to uncompensated losses arising in the disaster area, eliminates the current law requirements that personal casualty losses must exceed 10 percent of Adjusted Gross Income to qualify for deduction.
- Eliminates the current law requirement that taxpayers must itemize deductions to access this tax relief.
Penalty-Free Access to Retirement Funds:
- Provides an exception to the 10 percent early retirement plan withdrawal penalty for qualified fire relief distributions.
- Allows for the re-contribution of retirement plan withdrawals for home purchases cancelled due to eligible disasters.
- Provides flexibility for loans from retirement plans for qualified fire relief.
Encouraging Charitable Giving:
- Temporarily suspends limitations on the deduction for charitable contributions associated with qualified fire relief
Disaster-Related Employment Relief:
- Provides a tax credit for 40 percent of wages (up to $6,000 per employee) paid by a disaster-affected employer to an employee from a core disaster area.
Special Rule for Determining 2017 Earned Income Tax Credit and Child Tax Credit:
- For 2017, allows taxpayers to refer to earned income from the immediately preceding year for purposes of determining the Earned Income Tax Credit and Child Tax Credit.