What Relief Is Available to Taxpayers Affected by California Wildfires?

 Posted on March 05, 2025 in Taxation Law

In recent years, California has experienced several disasters in which wildfires have raged out of control, destroying many homes and businesses. One of the most devastating wildfires took place in Los Angeles County in January 2025, affecting people in cities like Pacific Palisades, Altadena, and Pasadena. As people, families, and businesses take steps to put their lives back together after suffering major losses, they can receive relief from the IRS in regard to certain tax issues.

Tax laws can be complicated, and taxpayers will need to understand what steps they can take to protect their financial interests as they deal with the aftermath of disasters. An experienced California tax attorney can provide guidance on how to address tax-related concerns in these situations, ensuring that business owners and families can receive the relief they need.

Extended Tax Filing Deadlines

Taxpayers who have been affected by wildfires may struggle to file tax returns and pay taxes that are due, especially if the required documents or financial information has been damaged or destroyed. To provide relief for these taxpayers, the IRS has extended all tax filing and payment deadlines for taxpayers in the affected area (Los Angeles County) to October 15, 2025.

The October 15th deadline will apply to:

• Tax returns that would have been due on April 15, 2025

• Quarterly estimated income tax payments due on January 15th, April 15th, June 16th, and September 15th

• Quarterly payroll taxes or excise taxes due on January 31st, April 30th, and July 31st

• S corporation and partnership returns due on March 17, 2025

• Corporation and fiduciary tax returns due on April 15, 2025

• Returns for tax-exempt organizations due on May 15, 2025

These deadline extensions will automatically apply to any taxpayer who has an address of record located in Los Angeles County. Taxpayers who do not have an address of record in the affected area or who may experience issues because they have records located in the affected area can contact the IRS to request relief.

Other Forms of Tax Relief

For people who have experienced losses due to wildfires, the IRS is providing some additional options to help address tax-related issues. Losses that a taxpayer experienced due to wildfires, such as damaged property or a loss of income due to a business closure, can be claimed on their tax returns, as long as the losses were not covered by insurance or were not reimbursed through other means. Losses can be claimed on either the return for tax year 2024 filed in 2025 or the tax return for 2025 that will be filed in 2026. An election may be made up to six months after the due date of a tax return, meaning that an election for losses claimed for tax year 2025 may be made at any point before October 15, 2026.

Taxpayers who received wildfire relief payments can exclude these payments from their gross income, as long as these payments address losses that are not covered by insurance or other forms of reimbursement. Relief payments may include government aid or aid from non-profit organizations that addresses living expenses, funeral expenses, repairs to a home, replacement of destroyed property, lost wages, personal injuries, or emotional distress.

People who have individual retirement accounts (IRAs) or other retirement plans may also qualify for relief. Special disaster distributions may be taken from these accounts, and these distributions will not be subject to the 10 percent tax for early withdrawal. Disaster distributions may be spread out over three years. Other hardship withdrawals may also be available depending on the terms of an IRA or retirement plan.

Contact Our San Jose, CA Tax Law Attorney for Disaster Relief

If you have questions about your options for addressing tax-related concerns after being affected by the wildfires in California, John D. Teter Law Offices can provide you with guidance. Our San Jose, CA tax lawyer will help you determine what forms of relief you may be eligible for, and we will advise you on the best steps to take to minimize your tax burdens as you recover from this disaster. Contact us at 408-866-1810 to arrange a consultation today.