Added tax relief for Sandy victims? ? Bankrate, Inc.

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While most of the country is watching the "fiscal cliff," members of Congress who represent areas hard hit by Superstorm Sandy are fighting to revise federal disaster relief for their constituents.

The Senate began debate Monday of a supplemental disaster assistance bill for fiscal year 2013.

That measure includes several tax relief components in connection with the federally designated Sandy disaster area.

As outlined by its cosponsors Sens. Charles Schumer, D-N.Y., and Robert Menendez, D-N.J., the legislation would, in part, allow:

• Affected residents to claim full itemized deduction of expenses paid or incurred as a result of disaster cleanup.
• Taxpayers who do not itemize to increase their standard deduction by the amount of disaster losses not covered by insurance.
• Donors to give more than the 50 percent of adjusted gross income limit in qualified disaster contributions.
• Storm victims to withdraw up to $100,000 in retirement account money to make repairs without facing the 10 percent early distribution or borrow more from their retirement accounts without immediate tax consequences.

While Schumer's and Menendez's colleagues are sympathetic to the troubles facing Sandy victims, some Senators are not fully behind the bill.

The bill includes more than $60 billion in emergency aid, and some fiscally conservative lawmakers believe that the measure is overloaded with projects that are not defined specifically enough.

Sen. Tom Coburn, R-Okla., well-known on Capitol Hill for his scrutiny of spending measures, has said that more than half the money would not be spent before 2015. "This is a stimulus bill, not an emergency bill," Coburn told CNN, adding that $20 billion to $22 billion probably is enough money to meet the immediate needs of Sandy victims.

There also is concern that this bill, like emergency aid measures approved in the past, does not have spending offsets to make up the budget difference in the proposed new expenditures.

While pro-Sandy-relief senators are fighting for their measure, a similar measure is pending in the House. Given that that chamber also has so many conservative members, passage there also could be problematic.

You can bet, however, that if the bill doesn't clear either the House or Senate in this lame duck session, lawmakers representing folks still trying to repair their Sandy-stricken properties will reintroduce their bills when the 113th Congress convenes in January 2013.

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Source: http://www.bankrate.com/financing/taxes/added-tax-relief-for-sandy-victims/

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