East Palestine – Taxable Payments

We have an important update to share with you regarding the new IRS update for those impacted by the train derailment. Here are some key takeaways:

Tax-Free Payments:
The IRS has classified the derailment as a disaster, what this means for you is that certain payment may be tax free. These include:

  • One-time $1,000 “inconvenience” payments to affected individuals;
  • Relocation expenses and expenses for replacing clothing and personal items;
  • Cost of repairing or rehabilitating homes and the surrounding environment;
  • Compensation to homeowners who sold their homes after the derailment; and
  • Medical expenses.

Taxable Payments:
However, some payments are still considered taxable – here are some examples:

  • Lost wages;
  • Access payments to property owners to allow the common carrier access to the train track for remediation and to clean nearby creeks and streams; and
  • Payments to businesses.

How to Report:
For those of you who have not yet filed for your 2023 tax returns, here are some important requirements for you to note:

  • If you haven’t filed your 2023 tax return, don’t report the tax-free payments.
  • If you’ve already filed and included these payments as taxable, amend your return using Form 1040-X to claim a refund.

For more information, you can visit this link: IRS Article

As always, we are here to help you during this time. Please feel free to contact me at [email protected]