IRS reminds businesses about Hurricane Katrina tax relief

New Orleans CityBusiness, Jan 16, 2006 by Greg LaRose

As businesses begin compiling 2005 tax records, the Internal Revenue Service is urging those who helped Hurricane Katrina victims to note changes in tax law.The Katrina Emergency Tax Relief Act of 2005 includes work opportunity tax credits of up to $2,400 per employee for businesses that hired persons displaced by the hurricane.

The credits were previously limited to hiring employees dependent on government assistance such as food stamps or supplemental Social Security. Businesses in the Katrina disaster area with fewer than 200 employees can claim the credit throughout 2005 if they retain an eligible employee. The act also removed some charitable contribution limits. An individual can choose not to apply the 50 percent income limitation to any charitable cash contribution other than one made to a private foundation. The gift must be made between Aug. 28 and Dec. 31, 2005. For corporations, the 10 percent income limitation is waived for contributions related to Hurricane Katrina made before 2006. If you provided rent-free housing in your principal residence to a Katrina victim for at least 60 days, you're allowed a $500 deduction per person to a maximum of $2,000. The deduction can be claimed in 2005 or 2006 but not in both years for the same displaced person.