The Tax Relief for Victims of Crimes, Scams, and Disasters Act would restore the federal tax deduction for personal casualty losses that was eliminated by the 2017 tax reform law. This deduction allows individuals to reduce their taxable income when they suffer financial losses from crimes, scams, natural disasters, or other casualties not covered by insurance. The bill applies retroactively to tax years starting in 2018, meaning taxpayers who previously couldn't claim these deductions could potentially file amended returns or refund claims. Taxpayers have an extended deadline to file claims for refunds or credits—until the tax filing deadline of the year the law is enacted—rather than the normal three-year statute of limitations. The legislation affects any individual who experienced qualifying personal casualty losses since 2018 and may be owed a tax refund as a result.
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