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Disaster Zone Incentives and Hurricane Tax Relief Credit

Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area.

Depending on the circumstances, the IRS may grant additional time to file returns and pay taxes. Both individuals and businesses in a Federally declared disaster area can get a faster refund by claiming losses related to the disaster on the tax return for the previous year, usually by filing an amended return.

This credit is available to employers who operated businesses in certain Federally designated disaster zones which became inoperable for a period of time (up to 150 days after the disaster) and continued to pay employees working in the designated disaster zone.

Qualified disaster zones are determined by the President and currently span the periods of January 1, 2018, to February 23, 2020.

For the purposes of this program, a location can be considered inoperable in many ways, including:

The credit amount is equal to 40% of the qualified wages paid to each eligible employee, up to $6,000 (making the maximum credit $2,400 per eligible employee). This includes wages paid without regard to whether the employee performs any services; at a different location from his or her principal place of employment or at the principal place of employment before significant operations have resumed. Employers can claim qualified wages regardless of whether the employer was reimbursed by insurance.

Note: Georgia, Florida, South Carolina, North Carolina, California, and Texas were most affected during these time periods.

If you live in an area hit by a natural disaster, and your community or region is declared a major disaster area by the President of the United States, it means that a number of federal programs and funding are available to individuals, business owners, state and local governments, and certain private nonprofit organizations, to help in the recovery from the effects of the disaster, according to the Federal Emergency Management Agency (FEMA).