California Wildfire Disaster Tax Relief Act of 2017

California Wildfire Disaster Tax Relief Act of 2017

This bill amends the Internal Revenue Code to allow various tax credits, deductions, and modifications to existing rules for individuals and businesses affected by wildfires in California.

With respect to individuals and businesses in the affected areas, the bill:

• waives the 10% additional tax on early distributions from retirement plans for up to $100,000 in distributions made on or after October 8, 2017, and before January 1, 2019;
• permits individuals to recontribute funds to retirement plans if the funds were distributed for a home purchase in a wildfire disaster area that was cancelled on account of the wildfires;
• increases the limit and extends the repayment deadline for loans from retirement plans;
• allows an employee retention tax credit for a portion of the wages paid to an employee whose principal place of employment on specified dates was in a wildfire disaster zone;
• temporarily suspends the limitation on charitable contributions for relief efforts in the wildfire disaster areas;
• modifies the rules for the deduction for personal casualty losses, and
• allows taxpayers to use earned income from the immediately preceding year for the purpose of determining earned income for the earned income tax credit and the child tax credit.

The bill is designated as an emergency requirement, which exempts the budgetary effects of the bill from certain budget enforcement rules, such as Pay-As-You-Go (PAYGO) rules.