The derailment of a train in Ohio has caused a major disruption in the area, leading to the closure of several roads and businesses. In response, the federal government has announced relief payments for individuals affected by the incident. The payments will help those who have been displaced or suffered financial losses due to the derailment.
The IRS today released Notice 2024-46 announcing that certain payments received by individuals affected by last year’s train derailment in East Palestine, Ohio, are not taxable.
Today’s related IRS release—IR-2024-156—explains that the IRS determined that the February 2023 derailment qualifies as “an event of a catastrophic nature,” and as a result various payments made to affected individuals by the common carrier that operated the derailed train are “qualified disaster relief payments,” which, by law, are excluded from gross income.
Individual taxpayers qualify for the exclusion only if the expenses covered by the qualified disaster relief payments made by the common carrier are not otherwise paid for by insurance or other reimbursement.
The common carrier issued Forms 1099-MISC to recipients of various payments, some of which are taxable and some of which are not because they are qualified disaster relief payments.
Tax-free qualified disaster relief payments made by the common carrier are:
Taxable payments include:
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