H.R. 5863 Federal Disaster Relief Act

[Bullyk9r]

H.R. 5863 was signed into law on 12/12/24 (Public Law No. 118-148). I received PG&E settlement funds from the CA Wildfires settlement in both 2022 and 2023. Those funds were included in my federal taxable income. I need to file amended returns for 2022 and 2023 to exclude those funds from my taxable income and get refunds. Is Turbo Tax updated to reflect H.R. 5863? If not, will it be or do I need to do my amendments manually?

[Opus 17 · Accepted solution]

You should be able to use TurboTax, since this change does not require any changes to the tax forms or instructions. You simply remove the previously included income. You will have to file by mail, of course. And, it is likely that the amended return for this issue may take longer to process than normal amended returns, because the IRS will take some time to figure out procedures and instructions for this late breaking change in the tax law.

[johnf2]

Bro, if legislation passed 12/12/24, I don't think our 22 software on 1/2/25 has been updated yet.  Checking now... https://steube.house.gov/taxrelief/

[Opus 17]

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@johnf2 wrote:

Bro, if legislation passed 12/12/24, I don't think our 22 software on 1/2/25 has been updated yet.  Checking now... https://steube.house.gov/taxrelief/

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There are 3 provisions in the disaster relief act.  For the non-taxability of fire payments, the program doesn't have to be changed.  All you need to do is remove the income and recalculate your tax and refund.  For non-taxability of hurricane Milton payments, just leave them off your 2024 return.  No programming change is needed.  For the revised casualty loss deduction, Turbotax does need to be reprogrammed, and it has not yet because not even the IRS has revised their forms yet.  

[KuiPeR]

Even though I received a 1099-MISC from the Fire Victim Trust for the payments, I should just amend the return and leave that off? That won't cause any issues?

[Opus 17]

@KuiPeR 

The general procedure to report income as non-taxable when you receive a 1099, is to enter the 1099-MISC, and then enter a negative amount of offset income with an explanation.  For example, if you receive a $5000 fire benefit payment, you would enter that, and then you would enter another item of -$5000 with an explanation like “adjustment for tax-free fire benefit payment.”

The adjustment process is already included in TurboTax. So the only thing you need to do is take your original tax return where you added the income, and amend it to leave the income alone and add the negative adjustment.