More Tax Relief Comes to Victims of 2005 Hurricanes

Business Wire, July 31, 2008

Housing Assistance Act Leads to Additional Tax Benefits for Storm Victims

KANSAS CITY, Mo. -- Provisions of the housing bill President Bush signed into law Wednesday are designed to provide more tax relief to victims of the 2005 Gulf Coast hurricanes. The Tax Institute at H&R Block has analyzed the tax impact of the legislation for taxpayers affected by the hurricanes, noting a possible reduction in their tax liability.

One provision of the new law allows taxpayers who claimed a casualty loss on their principal residence from damage caused by Hurricanes Katrina, Rita or Wilma to amend their return if they later received a grant for the loss. Taxpayers could be able to reduce their tax bill by claiming the reimbursement on the same return that reflects the loss.

The casualty loss deduction is reduced, but not below zero, by the amount of the grant. Any underpayment that results is not subject to interest or penalties if paid within a year of the amended return being filed.

For example, a taxpayer who lost a home and was displaced from a job due to a 2005 hurricane claimed the loss of property on that year's tax return. The taxpayer later received a grant to rebuild. The reimbursement would ordinarily be included in taxable income in the year received. This provision allows the taxpayer to amend the earlier return to offset the loss - thus giving him the opportunity to increase taxable income in a year in which he was in a lower tax bracket.

"Essentially, it's like getting a free ride back in time to amend your return," said Jackie Perlman, researcher analyst of The Tax Institute.

These new provisions encompass the Gulf Opportunity Zones (GO Zones) and also extend the GO Zone into parts of Alabama.

H&R Block tax offices are open year-round to assist taxpayers in understanding the new law and other tax changes that may affect them and their families. Call 1-800-HRBLOCK to find a local year-round office or log on to www.hrblock.com.

About H&R Block

H&R Block Inc. (NYSE: HRB) is the world's preeminent tax services provider, having served more than 400 million clients since 1955 and generating annual revenues of $4.4 billion in fiscal year 2008. H&R Block provides income tax return preparation and related services and products via a nationwide network of approximately 13,000 company-owned and franchised offices and through TaxCut[R] online and software solutions. The company also provides business services through RSM McGladrey and certain consumer financial services. For more information visit our Online Press Center at www.hrblock.com.