IRS Announces Relief for Taxpayers Affected by California Wildfires

On January 10, 2025, the IRS announced disaster tax relief for taxpayers affected by the wildfires in southern California. Affected taxpayers will now have until October 15, 2025, to file various federal individual or business tax returns and make certain tax payments. To qualify for the relief, taxpayers must reside or have a business in Los Angeles County, California. 

Filing and Payment Relief 

The relief applies for filing and payment deadlines occurring on or after January 7, 2025. The October 15, 2025, deadline applies to: 

• Individual income tax returns and payments normally due April 15, 2025;
• 2024 quarterly estimated tax payments normally due on January 15, 2025;
• 2025 quarterly estimated tax payments normally due on April 15, June 16, and September 15, 2025;
• 2024 contributions to individual retirement accounts (IRAs) and health savings accounts (HSAs) for eligible taxpayers;  
• Quarterly payroll and excise tax returns normally due on January 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 normally due on April 15, 2025; and 
• Calendar-year tax-exempt organization returns normally due on May 15, 2025.  

The IRS is also providing penalty relief for businesses that make payroll and excise tax deposits. Taxpayers that fail to make payroll and excise tax deposits due on or after January 7, 2025, but before January 22, 2025, will have any penalties abated provided that they make the deposits by January 22, 2025.  

The relief applies to federal tax returns and payments only. California has announced its own state relief options.  

Automatic Tax Relief 

The relief is provided automatically for any taxpayer with an IRS address located in the disaster area. However, if a taxpayer moved to an affected area and their IRS address of record is not in the disaster area, a notice from the IRS could be received for late filing or payment during the postponement period. The taxpayer should call the number on the notice to have the penalty abated if this occurs.  

Some taxpayers located outside the disaster area may also qualify for relief, such as relief workers or those taxpayers whose records necessary for filing are located in the disaster area. Those taxpayers are advised to contact the IRS for relief.  

Additional Tax Relief Information  

Additional relief may be available to affected taxpayers, including: 

• The ability to deduct uninsured or unreimbursed disaster-related losses,
• The exclusion of any qualified disaster relief payments from a government agency from gross income, and 
• Eligibility to take special disaster distributions from retirement plans or IRAs not subject to the 10% early distribution penalty (each plan or IRA has specific rules and guidance for their participants to follow). 

Federal Disaster Tax Relief Act 

Taxpayers who have been impacted by the wildfires should also benefit from the recently-enacted Federal Disaster Tax Relief Act of 2023. The Act grants relief for payments received for certain disasters and extends individual taxpayers’ ability to deduct personal casualty losses. The ability to deduct casualty losses is applicable for all federally declared disasters occurring through January 11, 2025, provided the disaster is declared by February 9, 2025. The exclusion of compensation for losses or damages resulting from qualified wildfire relief payments from gross income applies to any wildfire that is a federally declared disaster that occurs before January 1, 2026. Accordingly, impacted taxpayers should be able to deduct personal casualty losses to the extent not reimbursed by insurance as well as exclude compensation for losses from these wildfires from their federal gross income. 

Taxpayers who have been impacted by any recent environmental disaster, such as wildfires or hurricanes, should reach out to a trusted advisor to determine their filing deadlines and what relief may be available to them.