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 Cody@hdgrowthpartners.com