Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has released a fact sheet highlighting recent tax law changes made by the Heartland Disaster Tax Relief Act of 2008, which is part of the Emergency Economic Stabilization Act of 2008 (P.L. 110-343).
P.L. 110-343 provides certain tax breaks to victims of the severe storms, flooding and tornadoes that occurred in Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Missouri, Minnesota, Nebraska and Wisconsin (the Midwestern disaster area) where the government declared a disaster during the period beginning May 20, 2008, and ending July 31, 2008.

  The law changes are intended to help individuals who suffered losses as a result of the Midwestern disasters and make it easier for individuals and businesses to engage in charity to benefit those affected by the severe storms, flooding and tornadoes. Taxpayers located in the counties listed in Table 1 are generally eligible for all portions of the relief, while taxpayers located in the counties listed in Table 2 are eligible only for certain of the special tax provisions. The IRS will provide an explanation of the recently enacted legislation in Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas, which will be available in January 2009.

  Generally, for individuals affected by the Midwestern disasters, P.L. 110-343 eliminates the limitations on claiming casualty or theft losses of personal-use property and permits certain earned income tax credit and refundable child tax credit recipients to choose either tax year 2008 or 2007 to determine their earned income and use the more beneficial result. P.L. 110-343 also expands the Hope and Lifetime Learning educational credits to provide assistance to students enrolled and paying tuition at eligible educational institutions located in the Midwestern disaster area.

  In addition, the new law allows certain taxpayers who provided housing to individuals displaced by the Midwestern disasters to claim an additional $500 exemption, and provides tax-favored treatment for early distributions and loans from retirement accounts. P.L. 110-343 further allows affected individuals to exclude from income certain cancellations of debt and extends, from two years to five years, the replacement period for converted properties. Finally, the new law suspends the limits on certain charitable contributions, increases the standard mileage rate for charitable use of vehicles and excludes from gross income mileage reimbursements to charitable volunteers.

FS-2008-27,
2009FED ¶46,214

Other References:

 
Code Sec. 24

  CCH Reference - 2008FED ¶3770.35

 
Code Sec. 25A

  CCH Reference - 2008FED ¶3830.20

 
Code Sec. 32

  CCH Reference - 2008FED ¶4082.11

 
Code Sec. 108

  CCH Reference - 2008FED ¶7010.25

 
Code Sec. 151

  CCH Reference - 2008FED ¶8005.01

 
Code Sec. 165

  CCH Reference - 2008FED ¶10,005.041

  CCH Reference - 2008FED ¶10,101.023

 
Code Sec. 170

  CCH Reference - 2008FED ¶11,670.01

  CCH Reference - 2008FED ¶11,680.01

 
Code Sec. 408

  CCH Reference - 2008FED ¶18,922.0325

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