Liberty Tax Service Examines Wide-sweeping Tax Relief For Hurricane Victims

(Wednesday, October 12, 2005) - The recently-enacted Hurricane Katrina Emergency Tax Relief Act of 2005 aids Hurricane Katrina victims with a number of special measures. Liberty Tax Service provides free advice, free amending of returns, and an online hurricane loss calculator on its website ( www.libertytax.com ) that enables Katrina taxpayers to quickly estimate losses for tax purposes.

This relief act provides for the suspension of the adjusted gross income and dollar-limit floors for personal casualty losses. Non-business casualty losses in the Hurricane Katrina disaster area on or after August 25, 2005 are not subject to the usual 10 percent of the taxpayer's adjusted gross income or the $100 floor. Taxpayers who have suffered property losses due to Hurricane Katrina can have Liberty Tax amend their 2004 tax return free of charge to claim their losses. In addition, they can send their tax data online to Liberty Tax over a secure site to immediately start the filing process.

Taxpayers in areas declared federal disaster areas by the president have the choice of declaring their casualty loss on the current year's return (2005) or deducting the loss on the prior year's return (2004) in order to obtain money immediately when the need is the greatest. This can be done by filing Form 1040X, Amended U.S. Individual Income Tax Return . This will enable them to obtain a refund sooner since they do not have to wait until their 2005 tax return is filed.

These taxpayers generally will have until February 28, 2006, to file their return, meet deadlines and make payments due on or after August 25, 2005. The IRS will abate interest and any late filing penalties. "Hurricane Katrina" should be written in red on the applicable forms.

"We have waived preparation charges for those in Katrina disaster areas and will help them amend a 2004 return if that's to their best tax advantage," said John Hewitt, CEO and Founder of Liberty Tax Service.

Hurricane Katrina victims can also withdraw up to $100,000 from an IRA, 401 (K) plan, or similar savings plan without penalty for distributions made on or after August 25, 2005 and before January 2, 2007. There's also tax relief for generous homeowners and renters who have provided free shelter to Katrina evacuees in their primary residence for 60 consecutive days. They can deduct $500 per evacuee up to a maximum credit of $2000. Volunteers using their vehicles in their hurricane relief activities may deduct charitable mileage at 29 cents a mile from August 25, 2005 until August 31, 2005, and 34 cents per mile from September 1 st until the end of the year.

At this time, the relief act does not include Hurricane Rita victims, but Liberty Tax feels that should be forthcoming.

Liberty Tax Service has served 3 million customers. There are 1735 Liberty offices operating in the United States and Canada. The company provides free tax advice and free checking of self-prepared returns at each office. The Liberty Tax Service web site is www.libertytax.com .

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