Tax Relief for California Wildfire Victims: Extended Deadlines for IRAs and HSAs

The devastating wildfires that swept through California starting January 7, 2025, have left countless individuals and businesses facing unimaginable loss. In response, the Internal Revenue Service (IRS) has announced comprehensive tax relief measures to support those affected.
IRS Tax Relief Measures
Extended Filing and Payment Deadlines
The IRS has extended various tax deadlines, allowing affected individuals and businesses extra time to meet their tax obligations:
New Deadline: October 15, 2025.
Applies To:
- Individual income tax returns and payments.
- Business tax returns and payments.
- Estimated tax payments for both 2024 and 2025.
- Contributions to Individual Retirement Accounts (IRAs) and Health Savings Accounts (HSAs) for the 2024 tax year.
This relief aims to provide breathing room for those grappling with the aftermath of the wildfires.
Who Qualifies for Relief?
The relief applies to individuals and businesses located in areas designated by the Federal Emergency Management Agency (FEMA) as disaster zones. Currently:
- Los Angeles County: Eligible.
- Other Counties: FEMA may expand the disaster area; stay updated via the Tax Relief in Disaster Situations page.
The IRS automatically applies relief to taxpayers with a record of an address in the affected area. Those living outside the disaster zone but whose records are in the impacted area can also qualify by contacting the IRS Disaster Hotline at 866-562-5227.
Specific Tax Deadlines Extended
1. Individual and Business Tax Returns
Original deadlines for 2024 taxes extended to October 15, 2025.
This includes calendar-year partnerships, S corporation, and fiduciary returns.
2. Estimated Tax Payments
For 2024: The final quarterly payment is due on January 15, 2025.
For 2025: Quarterly payments originally due on April 15, June 16, and September 15.
3. IRA and HSA Contributions
Contributions for the 2024 tax year can now be made until October 15, 2025, allowing affected taxpayers to maximize their tax-advantaged savings.
4. Payroll and Excise Tax
Deposits originally due between January 7 and January 22, 2025, will not incur penalties if made by January 22, 2025.
Casualty Loss Deductions
If you suffered uninsured or unreimbursed losses due to the disaster, you may:
- Claim these losses on your 2024 tax return, which you’ll file in 2025, instead of waiting to report them on your 2025 return.
- Use FEMA Declaration Number 4856-DR on your tax return when claiming the loss.
This provision allows taxpayers to access potential refunds sooner, aiding in recovery efforts.
Special Provisions for Retirement Accounts
Disaster-affected individuals may also benefit from relaxed rules for retirement plans:
- Disaster Distributions: Eligible taxpayers can take distributions from retirement accounts without incurring the usual 10% early withdrawal penalty.
- Income Spreading: Income from disaster-related distributions can be spread over three years.
- Hardship Withdrawals: Easier access to funds for immediate needs.
Each plan has specific rules, so consult with your plan administrator.
Protecting Yourself: Donations and Scams
In times of crisis, charitable efforts surge, but so do scams. To ensure your donations make an impact:
- Verify charities through the IRS’s Tax-Exempt Organization Search tool.
- Legitimate donations to 501(c)(3) organizations may qualify for deductions, including travel, mileage, and non-cash contributions.
How to Claim Tax Relief
Automatic Relief: If you live in a disaster area, the IRS will automatically apply relief to your account.
For Those Outside the Disaster Zone:
- If your records are in the affected area, call the IRS at 866-562-5227.
- Relief also applies to workers assisting in relief efforts through recognized organizations.
Penalty Notices: If you receive a late filing or payment penalty notice, contact the IRS at the number on the notice to request penalty abatement.
The IRS's tax relief measures provide significant support to those affected by the California wildfires, offering extended deadlines and opportunities to manage tax obligations during this challenging time. Taxpayers should take advantage of these extensions and consult with tax professionals to ensure compliance and optimize benefits.
Recent Updates on Tax Relief for California Wildfire Victims
https://www.barrons.com/articles/tax-filing-irs-opening-day-2025-season-1c0e1eb1
- Phone Number: 917-415-6166
- Email Address: njamil@njcpausa.com
- Address: 51 Atlantic Avenue, Suite 202, Floral Park, NY 11001
