The IRS and the California Franchise Tax Board (FTB) have announced tax relief measures for individuals and businesses impacted by the wildfires and straight-line winds that began on January 7, 2025, in Southern California.

Following a Federal Emergency Management Agency (FEMA) declaration regarding the Los Angeles wildfires, the IRS issued a news release (IR-2025-10) on January 10, 2025, announcing extensions for certain tax-filing and payment deadlines for individuals and businesses in the affected disaster area. The following day, Governor Gavin Newsom outlined additional relief measures related to California state taxes. The designated disaster area includes all of Los Angeles County, extending beyond the immediate fire zone.   

Federal Tax Relief for Disaster-Affected Individuals and Businesses

Taxpayers affected by recent disasters have been granted an extension for filing and paying taxes.

Key Points:

• Extended Deadline: Affected individuals and businesses now have until October 15, 2025 to file returns and pay any taxes originally due between January 7, 2025, and October 15, 2025. 
• Eligibility: This relief applies broadly. Taxpayers located in the designated disaster area are automatically eligible. Others affected by the disaster, such as those whose records were located in the affected area or relief workers, may also qualify and should contact the IRS to request relief.
• Affected Tax Obligations: The relief covers a wide range of tax obligations, including estimated tax payments due on January 15, April 15, June 16, and September 15, 2025, as well as tax returns due on April 15, 2025, and other applicable deadlines.

Delayed Filing And Payment Deadlines

Taxpayers in the affected areas now have until October 15, 2025, to file various federal individual and business tax returns and make payments for deadlines originally scheduled between January 7 and October 15, 2025. According to the IRS website, this relief covers, but is not limited to:

• Individual income tax returns and payments are typically due on April 15, 2025.
• 2024 contributions to individual retirement accounts (IRAs) and health savings accounts (HSAs) for eligible taxpayers.
• 2024 quarterly estimated income tax payments, including those normally due on January 15, April 15, June 16, and September 15, 2025.
• Quarterly payroll and excise tax returns usually due on January 31, April 30, and July 31, 2025.
• Calendar-year partnership and S corporation returns, typically due on March 17, 2025.
• Calendar-year corporation and fiduciary returns and payments generally due on April 15, 2025.
• Calendar-year tax-exempt organization returns, typically due on May 15, 2025.

Other Tax Consequences of Disasters

Disasters can have significant tax implications. Key considerations include:

• Deductibility of Losses:
  • Treatment of disaster-related losses incurred in 2025
  • Ability to deduct losses against 2024 income
• Impact of Insurance Recoveries: How insurance reimbursements affect tax liability
• Treatment of Disaster Relief Payments: Tax implications of receiving qualified disaster relief payments
• Involuntary Conversions: The impact of Section 1033 (involuntary conversions) on property losses
• Theft and Bad Debt Losses: Deductibility of losses due to looting and bad debts
• Cancellation of Indebtness Income: Tax implications of debt forgiveness
• Estate and Gift Planning: The impact of diminished asset values on estate and gift tax planning

The tax consequences of disasters can vary significantly for individuals, businesses, and corporations.   

Who Qualifies 

The IRS automatically grants filing and penalty relief to taxpayers with an IRS address of record in the disaster area. Taxpayers who moved to the disaster area after filing their return or whose IRS address of record is not in the disaster area should call the number on their IRS notice to request penalty abatement.

For taxpayers living outside the disaster area but whose essential records are located within the affected area, the IRS will provide assistance. To request relief, these taxpayers should contact the IRS at 866-562-5227. This relief also extends to workers assisting with disaster recovery efforts who are affiliated with recognized government or philanthropic organizations.

Conclusion

Huckabee CPA, located in San Diego, California, offers comprehensive guidance on federal, state, and local tax relief to help you navigate the specific provisions applicable to your situation.

Our team can assist with filing claims and extensions, calculating losses, and identifying eligible deductions, credits, and other forms of relief the IRS provides following a federally declared disaster. If you have any questions about how this impacts your tax obligations, feel free to contact Huckabee CPA for guidance.