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On Dec. 12, 2024, the Federal Disaster Tax Relief Act of 2023, Pub. Law 118-148, section 3, provided that qualified wildfire relief payments were not subject to tax. On July 4, 2025, Pub. Law 119-21, commonly known as The One, Big, Beautiful Bill (OBBB), extended certain provisions relating to disaster-related personal casualty losses from the Taxpayer Certainty and Disaster Tax Relief Act of 2020. These frequently asked questions address both recently enacted laws.
Wildfire Relief Payments
Q1. Do I have to pay taxes for payments I’ve received as an individual impacted by wildfires?
A1. Qualified wildfire relief payments received to compensate your losses, expenses, or damages due to the wildfire are not taxable, so long as these items were not otherwise paid for by insurance or other reimbursement. You can exclude from gross income qualified wildfire relief payments you received between Jan. 1, 2020, and Dec. 31, 2025, for any forest or range fire that was declared a Federal disaster in 2015 or in a later year.
Qualified wildfire relief payments include compensation for:
- Additional living expenses,
- Lost wages (other than compensation for lost wages paid by your employer which would otherwise have paid such wages),
- Personal injury or death, and
- Emotional distress.
You cannot take a credit or deduction, or increase the basis in your property, related to any expense for which you received a qualified wildfire relief payment.
Q2. I already filed my tax return, what do I need to do?
A2. If you already filed your tax returns for 2020 through 2024 and did not report any qualified wildfire relief payments as taxable on your returns, you do not need to take any action.
If you already filed your tax returns for 2020 through 2024 and reported qualified wildfire relief payments as taxable you may, subject to your period of limitations for credit or refund, amend your returns to exclude the payments and claim any refund of taxes paid by filing Form 1040-X. See Q5 for details on How long do I have to file my amended returns.
The IRS urges anyone who e-filed their return for tax year 2022 or a later year to e-file their amended return to speed processing. Visit File an amended return for details.
For tax years 2020 and 2021 returns and any return originally filed on paper, the amended return must be filed on paper. See Form 1040X FAQs for more information.
- If filing Form 1040-X electronically, attach a blank .pdf with filename “QWR-Qualified Wildfire Relief.” You may also type in, “QWR-Qualified Wildfire Relief,” at the beginning of Part III, Explanation of Changes.
- If filing Form 1040-X on paper, write, “QWR-Qualified Wildfire Relief,” at the top of Form 1040-X, as well as at the beginning of Part II, Explanation of Changes. Mail the Form 1040-X to the address in the Form instructions.
Q3. I have not filed yet. What do I need to do?
A3. Any taxpayer who has not yet filed their return does not need to report qualified wildfire relief payments on their tax return, even if reported to them on Form 1099-MISC. However, if taxable payments are received, they must be reported.
- If filing Form 1040 electronically, attach a blank .pdf to the Form 1040 with a filename “QWR-Qualified Wildfire Relief.”
- If filing Form 1040 on paper, write “QWR-Qualified Wildfire Relief” at the top of Form 1040. Mail the Form 1040 to the address in the Form instructions.
Q4. What happens if the IRS contacts me because I didn't report the full amount shown on a Form 1099-MISC that I received reporting qualified wildfire relief payments?
A4. The IRS is working to avoid contacting impacted individuals about non-taxable amounts received. If you are contacted by the IRS, please reference Federal Disaster Tax Relief Act of 2023 and inform the IRS employee that these payments are qualified wildfire relief payments.
Q5. How long do I have to file my amended returns?
A5. To claim a refund of any taxes paid on qualified wildfire relief payments for tax years 2020 or 2021, individuals will have until Dec. 12, 2025, or until the expiration of the period of limitations on filing a refund claim under section 6511 of the Internal Revenue Code for the relevant year, whichever is later, to file amended returns claiming a credit or refund. For tax years 2022 through 2025, to claim a refund of any taxes paid on qualified wildfire relief payments, individuals have until the expiration of the period of limitations on filing a refund claim under section 6511(a) for the relevant year. Visit File an amended return for details.
Casualty Losses
Q6. How should I take into account casualty losses resulting from a disaster?
A6. A personal casualty loss is a loss arising from fire, storm, shipwreck, or other casualty not compensated for by insurance or otherwise. Personal casualty losses (except to the extent of personal casualty gains) are disallowed unless attributable to a Federally declared disaster, subject to certain limitations described in Q7. Beginning in 2026, personal casualty losses attributable to a State declared disaster (including the District of Columbia and U.S. territories) are also allowed (see Q8 concerning State declared disasters.) Personal casualty losses also include losses from theft that are not connected with a trade or business, or a transaction entered into for profit. Theft losses incurred in a transaction entered into for profit that are not attributable to a Federal or State declared disaster may still be deductible.
Q7. Are personal casualty and theft losses attributable to a Federally declared disaster subject to a limitation?
A7. Personal casualty and theft losses attributable to a Federally declared disaster are subject to the $100 per casualty and 10% of your adjusted gross income (AGI) limitation unless they are attributable to a “qualified disaster.” A qualified disaster is a disaster occurring in an area declared by the President and enumerated in a disaster declaration during a specific period of time (see Q9 for required time periods). Personal casualty and theft losses attributable to a qualified disaster are not subject to the 10% of AGI limitation, and the $100 per casualty limitation is increased to $500.
Q8. Are personal casualty and theft losses attributable to a State declared disaster subject to a limitation?
A8. Beginning in 2026, personal casualty and theft losses attributable to a State declared disaster are subject to the $100 per casualty and 10% of AGI limitations. Such losses are not eligible to be attributable to a “qualified disaster” because a qualified disaster may only be declared by the President. A State-declared disaster is declared by the State’s Governor, or in the case of the District of Columbia, the Mayor.
Q9. Did the OBBB affect qualified disaster losses?
A9. Yes, the OBBB extended the qualified disaster loss provisions of prior legislation. Personal casualty and theft losses attributable to a qualified disaster that meet certain requirements described below are subject to the increased limitation of $500 per casualty and are not subject to the 10% of AGI limitation. The OBBB did not change the treatment of State-declared disasters, which do not qualify for qualified disaster losses.
To qualify for the benefit of a qualified disaster loss, a wildfire must be a qualified disaster and must meet two timing requirements:
- First, the qualified disaster must have been declared during the period between Jan. 1, 2020, and Sept. 2, 2025.
- Second, the qualified disaster must have had an incident period that began on or after Dec. 28, 2019, and on or before July 4, 2025, and must have ended no later than Aug. 3, 2025.
Taxpayers should be aware that neither the Taxpayer Certainty and Disaster Tax Relief Act of 2020 nor the OBBB provided any extension of time with respect to the section 6511 period of limitations on claiming a credit or refund.