Many people are confused about the recent IRS disaster relief for taxpayers living in Israel. It is important to understand what this relief is and what it is not.

Many people are confused about the recent IRS disaster relief for taxpayers living in Israel. It is important to understand what this relief is and what it is not.

The IRS extended filing and payment deadlines for taxpayers in Israel under IRC 7508A. This provision allows the Treasury Department to postpone deadlines for individuals affected by a terrorist attack or military action. It is a narrow category of relief and only affects deadlines.

This is completely different from a “federally declared disaster” under the Stafford Act. A federally declared disaster is issued through FEMA and applies only to areas within the United States and its territories. 

Israel cannot receive a Stafford Act declaration because it is outside FEMA’s jurisdiction.

As a result, the special retirement plan (IRA) rules for qualified disaster distributions do not apply. 

The $22,000 penalty free withdrawal, the three year income spread, and the repayment option apply only to Stafford Act disasters within the United States. The Israel relief does not qualify.

For taxpayers in Israel, the only retirement related exception that may apply is the new $1,000 emergency personal expense distribution, which is available to all taxpayers regardless of location.

If you have questions about how the Israel relief applies to your situation, feel free to reach out.