Access retirement funds in a disaster

A taxpayer may be eligible for relief that provides for expanded access to their retirement funds if their principal residence was in a major disaster area and they sustained an economic loss due to that disaster. An economic loss includes, but is not limited to:

• Being displaced from the taxpayer’s principal residence.

• Loss or damage to or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause.

• Lost income due to temporary or permanent layoff.

  These types of disaster relief are available to people who qualify:

  1. May withdraw up to $22,000 from an IRA or other eligible retirement plan.

  • Amount exempt from the 10% early distribution tax.

  • May repay to a retirement plan or IRA within three years of the distribution.

  • Distribution may be included equally in income over three years.

  2. A retirement plan may offer increased loan limits and delay repayments.

IRS and California Franchise Tax Disaster Relief

The Internal Revenue Service announced tax relief for individuals and businesses in southern California affected by wildfires and straight-line winds that began on Jan. 7, 2025.

These taxpayers now have until Oct. 15, 2025, to file various federal individual and business tax returns and make tax payments.

IRS Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred from Jan. 7, 2025, through Oct. 15, 2025 (postponement period). As a result, affected individuals and businesses will have until Oct. 15, 2025, to file returns and pay any taxes that were originally due during this period.

California Franchise Tax and payment relief

Taxpayers in Los Angeles County will be granted a postponement to October 15, 2025, to file California tax returns on 2024 income and make any tax payments that would have been due January 7, 2025, through October 15, 2025. This aligns with the federal extension recently granted to California’s wildfire victims.

Make sure you've withheld enough tax

Consider adjusting your withholding if you owed taxes or received a large refund when you filed. Changing your withholding can help you avoid a tax bill or let you keep more money each payday. Credit amounts may change each year, so visit IRS.gov and use the Interactive Tax Assistant to identify whether you qualify for any tax credits that may call for a withholding adjustment. Life changes – getting married or divorced, welcoming a child, or taking on a second job - may also mean changing withholding.

Changes that may affect your tax refund

Life events, such as purchasing a home, going to college or losing a job, may make you eligible for certain tax benefits. Other circumstances, such as getting married or divorced, welcoming a child or experiencing the death of a spouse or a dependent you claim, could also affect your tax benefit eligibility and filing status. These changes could mean you qualify for tax credits like the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC), the Child and Dependent Care Credit and Credit for Other Dependents(ODC).

• For 2024, the CTC is worth up to $2,000 for each qualifying child. A child must be under age 17 at the end of 2024 to be a qualifying child.

• For 2024, the EITC eligible taxpayers with no qualifying children may receive up to $632.

• If your dependent is age 17 or older at the end of 2024, they may qualify for the ODC.

Gather and organize your tax records

Organized tax records make preparing a complete and accurate tax return easier. It helps you avoid errors that lead to delays that slow your refund and may also help you find overlooked deductions or credits.

Wait to file until you have your tax records including:

• Forms W-2 from your employer(s)

• Forms 1099 from banks, issuing agencies and other payers including unemployment compensation, dividends, pension, annuity or retirement plan distributions

• Form 1099-K, 1099-MISC, W-2 or other income statement if you worked in the gig economy

• Form 1099-INT if you were paid interest

• Other income documents and records of digital asset transactions

• Form 1095-A, Health Insurance Marketplace Statement, to reconcile advance payments or claims Premium Tax Credits for 2022 Marketplace coverage

• IRS or other agency letters

• CP01A Notice with your new Identity Protection PIN

Taxpayers may receive a Form 1099-K

Taxpayers who received more than $5,000 in payments for goods and services through an online marketplace or payment app in 2024 should expect to receive a Form 1099-K in January 2025. IRS will also receive a copy of your Form 1099-K.

There have been no changes to the taxability of income. All income, including proceeds from part-time work, side jobs or the sale of goods and services is taxable.  Taxpayers must report all income on their tax return unless it's excluded by law, whether they receive a Form 1099-K, a Form 1099-NEC, Form 1099-MISC, or any other information return.

It is important for taxpayers to understand why they received a Form 1099-K and how to use it along with their other records to figure and report the correct amount of income on their tax return. It is also important for taxpayers to know what to do if they received a Form 1099-K but shouldn't have. In either situation, good record-keeping is key and will help make tax filing easier.