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CAUTION

Qualified disaster relief payments don’t include:

• Payments for expenses otherwise paid for by insurance or other reimbursements; or

• Income replacement payments, such as payments of lost wages, lost business in- come, or unemployment compensation.

Qualified wildfire relief payments. Certain qualified wildfire relief payments are not taxable to the extent your losses, expenses, or damages compensated by these payments were not otherwise compensated for by insurance or other reimbursement. You can exclude qualified wildfire relief payments you received between January 1, 2020, and December 31, 2025, for

76 Chapter 11 Casualties, Thefts, and Condemnations Publication 225 (2025)

any forest or range fire declared a federal disaster in 2015 or a later year.

Qualified wildfire relief payments include any amount you receive for losses, expenses, or damages, including compensation for:

• Additional living expenses,

• Lost wages (other than compensation paid by an employer who would have otherwise paid your wages),

• Personal injury or death, or

• Emotional distress.

You cannot take a credit or deduction, or increase the basis in your property, related to any expense for which you were compensated by a qualified wildfire relief payment.

Qualified disaster mitigation payments. Qualified disaster mitigation payments made under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) aren’t included in income. These are payments you, as a property owner, received to reduce the risk of future damage to your property. You can’t increase your basis in property, or take a deduction or credit, for expenditures made with respect to those payments.

Sale of property under hazard mitigation program. Generally, if you sell or otherwise transfer property, you must recognize any gain or loss for tax purposes unless the property is your main home. You report the gain or deduct the loss on your tax return for the year you realize it. (You can’t deduct a loss on personal-use property unless the loss resulted from a casualty, as discussed earlier.) However, if you sell or otherwise transfer property to the federal government, a state or local government, or an Indian tribal government under a hazard mitigation program, you can choose to postpone reporting the gain if you buy qualifying replacement property within a certain period of time. See Postponing Gain, earlier, for the rules that apply.

Other federal assistance programs. For more information about other federal assistance programs, see Crop Insurance and Crop Disas- ter Payments and Feed Assistance and Pay- ments in chapter 3.

Postponed tax deadlines. The IRS may postpone for up to 1 year certain tax deadlines of taxpayers who are affected by a federally declared (or state declared) disaster. The tax deadlines the IRS may postpone include those for filing income, excise, and employment tax returns; paying income, excise, and employment taxes; and making contributions to a traditional IRA or Roth IRA.

If any tax deadline is postponed, the IRS will publicize the postponement in your area and publish a news release and, where necessary, a revenue ruling, revenue procedure, notice, announcement, or other guidance in the Internal Revenue Bulletin (IRB). Go to IRS.gov/ DisasterTaxRelief to find out if a tax deadline has been postponed for your area.

Who is eligible. If the IRS postpones a tax deadline, the following taxpayers are eligible for the postponement.

• Any individual whose main home is located in a covered disaster area (defined next).

• Any business entity or sole proprietor whose principal place of business is located in a covered disaster area.

• Any individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in a covered disaster area.

• Any individual, business entity, or sole proprietorship whose records are needed to meet a postponed tax deadline, provided those records are maintained in a covered disaster area. The main home or principal place of business doesn’t have to be located in the covered disaster area.

• Any estate or trust that has tax records necessary to meet a postponed tax deadline, provided those records are maintained in a covered disaster area.

• The spouse on a joint return with a taxpayer who is eligible for postponements.

• Any individual, business entity, or sole proprietorship not located in a covered disaster area but whose necessary records to meet a postponed tax deadline are located in the covered disaster area.

• Any individual visiting the covered disaster area who was killed or injured as a result of the disaster.

• Any other person determined by the IRS to be affected by a federally declared disaster.

Covered disaster area. This is an area of a federally or state declared disaster area in which the IRS has decided to postpone tax deadlines for up to 1 year.

Abatement of interest and penalties. The IRS may abate the interest and penalties on the underpaid income tax for the length of any postponement of tax deadlines.