UPDATE, Monday, Jan. 13, 2025: California officials also are offering taxpayers in Los Angeles County a postponement on filing 2024 state tax returns and making tax payments that would have been due between January 7 and October 15, 2025.
California firefighters, joined by their brethren from other states and Canada and Mexico, are still struggled to contain the catastrophic wildfires that have engulfed the Los Angeles metropolitan area.
Since the outbreak started Jan. 7, at least 24 people have died. More than 180,000 residents have been evacuated. More than 12,000 structures have been destroyed. And the winds that have spread the flames and hampered efforts to douse them continue.
It will be a long time before Southern California residents recover. However, the federal government is trying to help in the immediate aftermath, and even as fires still rage.
Following assessments by the Federal Emergency Management Agency (FEMA), President Joe Biden issued major disaster declaration for Los Angeles County. That then set up the Internal Revenue Service’s move to offer the affected L.A. taxpayers tax relief.
Those who’ve lost so much are not thinking of taxes right now, and the IRS move ensures they don't have to for a while.
Then, when the mundane tasks of their pre-disaster lives return, the tax system might be able to provide some additional relief.
IRS disaster tax relief: The IRS’ Jan. 10 announcement provides tax relief for individuals and businesses in southern California affected by wildfires and straight-line winds that began on Jan. 7.
The most immediate item is more time to deal with annual tax filing. The L.A. area residents in the FEMA designated area (map below) now have until Oct. 15 to file various federal individual and business tax returns and make tax payments.
If FEMA later adds any other counties to the disaster area, those taxpayers will receive the same tax relief. You can find the relief eligible localities at the IRS’ special tax relief in disaster situations web page.
Tax filing and payment specifics: The relief for the California taxpayers postpones various tax filing and payment deadlines that occurred from the fires’ outbreak on Jan. 7 through Oct. 15.
During this nine month postponement period, affected individuals and businesses get more time to file returns and pay any taxes that were originally due during that time.
This means the Oct. 15 deadline applies to —
- Individual income tax returns and payments normally due on April 15, 2025.
- 2024 contributions to IRAs and health savings accounts for eligible taxpayers.
- 2024 quarterly estimated income tax payments normally due on Jan. 15, 2025, as well as estimated tax payments normally due on April 15, June 16, and Sept. 15, 2025.
- Quarterly payroll and excise tax returns normally due on Jan. 31, April 30, and July 31, 2025.
- Calendar-year partnership and S corporation returns normally due on March 17, 2025.
- Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025.
- Calendar-year tax-exempt organization returns normally due on May 15, 2025.
In addition, the IRS will abate penalties for businesses that fail to make payroll and excise tax deposits that were due on or after Jan. 7 and before Jan. 22 as long as the deposits are made by Jan. 22.
No action needed: If you’re in the disaster area, you don’t have to worry about asking for or confirming the IRS tax relief. The agency automatically provides filing and penalty relief to any taxpayer whose address of record in the IRS system is located in the disaster area.
However, the IRS might not have the correct disaster area address for some taxpayers. This could be the case where taxpayers moved into the area now declared a major disaster after they filed their last tax return.
These taxpayers who miss disaster postponement period deadlines could receive a late filing or late payment penalty notice. In these cases, the filers need to call the number on the notice to explain the situation and have the penalty abated.
In addition, the IRS says it will work with any taxpayer who lives outside the disaster area, but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area.
These taxpayers who live outside the disaster area but qualify for relief need to contact the IRS toll free at (866) 562-5277.
Finally, individuals who are assisting with relief activities through a recognized government or philanthropic organization also are eligible for this disaster relief.
Deducting uninsured disaster losses: When disaster-affected taxpayers do get their lives back in some order and start thinking about taxes, the IRS reminds them that they may be able to deduct some disaster losses. This itemized claim is available for damaged or destroyed property not covered by insurance or other reimbursement.
Claiming the loss can result in a larger refund, particularly if you maximize it by choosing the best tax year in which to make the claim. When it comes to disaster casualty losses, taxpayers can choose to claim it on either the return for the year the loss occurred — in this instance, the 2025 tax year return normally filed next year — or on the return for the prior year, which is their 2024 return.
However, because of special disaster area considerations, taxpayers also have even more extra time — up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) — to decide which in which tax year claim.
Since this is a 2025 disaster, that mean individual filers have until next Oct. 15, 2026, or six months after the 2026 Tax Day on April 15, to make the choice.
Because it likely will take many Californians that long to decide, that extended Oct. 15, 2026, deadline is this weekend's By the Numbers figure.
Regardless of when you make the claim, arriving at the decision is not one to be taken lightly. You need to run the numbers for each potential tax year filing to see which produces the more favorable tax result.
My post on considerations in making a major disaster tax claim has more. So does IRS Publication 547, Casualties, Disasters, and Thefts.
Whenever you do decide to make a disaster loss claim, be sure to write the FEMA declaration number — that’s 4856-DR for the California fires declaration — on your return.
Taxpayers with disaster-related tax questions also can call the agency’s toll-free disaster hotline at (866) 562-5227. And, of course, you can talk with a tax professional for help in making this decision and filing.
Additional resources: Finally, in devastating situations like the California wildfires, the IRS has a variety of other resources, including FAQs for disaster victims; IRS.gov’s disaster assistance and emergency relief for individuals and businesses page; and Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) and its business companion Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook.
The Small Business Administration also provides disaster assistance for homeowners, renters, nonprofits, and businesses of all sizes affected by the wildfires and straight-line winds in California.
You also might find these items of interest:
- Biden signs disaster relief bill that took more than a year to clear Congress
- IRS and other government resources can help you deal with a natural disaster
- Taxpayers in 24 states and 2 territories facing disaster-delayed 2023 filing deadlines
- Storm Warnings: Preparing for, recovering from, and helping those affected by natural disasters
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