Tax Law Changes - Relief For Flood Victims

In the spring of 2008 there were many people in the Midwestern US who were severely affected by flooding. The tax law changes for the 2008 tax year has addressed this issue by offering several tax breaks to them. They can now deduct any losses that were not covered by insurance. Also, they are not required to reduce that amount by the floor amount of $100 or any adjusted gross income when doing so. These victims are also allowed to make penalty free withdraws on their IRA up to $100,000. The taxes due for the amount they take out can be spread out over a three year period.

All victims of a flood in these areas are entitled to an extra $500 in exemptions for each person in the household. This exemption comes with a $2000 maximum. The credits for hope and lifetime earnings for victims of these flood areas has increased to double the amount as well. These tax law changes are designed to help the victims keep more money in their pocket for rebuilding the flooded communities.