Charitable-Giving Incentives
You may deduct a larger amount of cash donations for any donations made between August 28 and December 31, 2005, to any qualified charity.
If you provide shelter for individuals displaced by Hurricane Katrina, you may claim an exemption of $500 per person housed (with a maximum of $2,000).
The deductible mileage rate for Katrina relief work is increased to 29 cents per mile for miles driven prior to September 1, 2005, and 34 cents per mile for miles driven after August 31, 2005.
Retirement Plan Relief
Victims may take up to $100,000 in qualified disaster-relief distributions from an IRA or pension plan. The tax on the distributions may be spread over 3 years and the distributions are not subject to a penalty. You may also recontribute the amount to a plan within three years and pay no tax.
The maximum loan amount from qualified plans has increased to $100,000 for victims.
Other Benefits
Two work-related credits for employers affected by Hurricane Katrina.
Cancellation of non-business debt due to Katrina is not taxable income.
Non-business Katrina casualty losses are not subject to any deductible amounts thus increasing the tax deduction.
You have 5 years (rather than 3) to replace property destroyed due to Katrina.
Victims of Katrina may use 2004 or 2005 income to compute the Earned Income Credit and refundable Child Tax Credit.
Filing and payment deadlines for victims have been extended and there will be relief of penalties and interest. (Filing extensions and interest forgiveness also apply to victims of Hurricane Rita and to most state taxes, as well.)
State Benefits
Many states (such as California) have not yet conformed to these new Federal tax benefits.