Hurricane Sandy Victims Benefit from Unexpected Tax Savings
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- By Stacey Bumpus
- November 2, 2012
As a tough week comes to a close, many Hurricane Sandy victims are in the process of piecing their lives back together. The process is expected to be a slow one, but state officials on the east coast say they will eventually help all of their residents in the storm’s aftermath.
A benefit headed toward hurricane victims that they may be unaware of is an upcoming tax break. The IRS has announced that some affected individuals will not have to worry about specific tax liabilities in the storm’s wake.
Hurricane Sandy Victims Get Back on Track
On Friday morning, nearly a dozen states are still working to ensure Hurricane Sandy victims have access to the assistance they need. With more than 8.5 million without power at one point and 92 people losing their lives to the storm, getting back on track has been more challenging than expected.
The good news is that some of the hardest-hit states are gaining traction in their recoveries. New Jersey has reduced its power outages by half and a relief fund for residents in New York City’s borough of Staten Island has been created.
Celebrities are also jumping on-board to raise money for Hurricane Sandy victims. On Friday, NBC is expected to hold a benefit concert with help from Bruce Springsteen, Jon Bon Jovi, Christina Aguilera, Mary J. Blige and Tina Fey all participating.
Tax Breaks for Hurricane Sandy Victims
Unexpected sources of assistance for Hurricane Sandy victims who need help supplementing their emergency savings account in an effort to rebuild are tax breaks from the government. Here are a few ways that Sandy victims can benefit:
- Storm-related workers compensation: Workers who receive storm-related compensation from their employers won’t face a tax liability. The payments include a number of expenses such as funeral costs.
- Payments from charities and state programs: Payments from charities, state programs and the Federal Emergency Management Agency (FEMA) will also be tax-exempt, according to the IRS.
- 401(k) loans: Taxpayers will be allowed to borrow funds from their 401(k) retirement savings in to make storm repairs, or under other specific circumstances, without the usual penalties.
The IRS also announced that businesses and tax preparers impacted by the storm have been granted a one-week extension to pay payroll and excise taxes that were due on October 31. The agency said the tax breaks will impact taxpayers in 11 states that have been impacted by the Hurricane Sandy.