How Disaster Relief Can Lower Taxes for Doctors in 2025

Jul 29
2 min read

Updated: Aug 4

The 2025 Los Angeles wildfires and other federally declared disasters have deeply impacted doctors and dentists across California and beyond. While rebuilding your practice and supporting your family come first, disaster-related tax relief can reduce your 2025 tax burden and improve cash flow during recovery.

At ISTAXPro, we ensure your bookkeeping and tax returns fully capture disaster-related provisions you qualify for, helping you file accurately while focusing on your patients and your practice.

Extended Filing and Payment Relief

The IRS extends filing and payment deadlines for taxpayers in disaster-declared areas. If your home or practice is in an affected zone, you may:

Have additional months to file your 2024 and 2025 tax returns and pay taxes without penalties or interest.
Delay quarterly estimated tax payments while prioritizing practice restoration.

Check whether your address qualifies under the federal disaster declaration on the IRS Disaster Relief page.

Accounting for Doctors

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Casualty Loss Deductions

If your home, practice, or equipment was damaged and not fully covered by insurance, you may be eligible for casualty loss deductions:

You can choose to claim losses on your 2024 or 2025 return, depending on which provides a better tax benefit.
Disaster rules may waive the 10% AGI limitation, making it easier to deduct losses.

Document damages, out-of-pocket expenses, repair estimates, and insurance payouts. Receipts and photos will support your claim when filing.

Accessing Retirement Funds Without Penalties

Disaster provisions may allow penalty-free withdrawals from retirement accounts for disaster-related expenses:

Withdraw up to $22,000 without early withdrawal penalties for qualified expenses.
Spread the tax on distributions over three years.
Repay the withdrawal within three years to avoid taxes if your finances recover.

While we do not advise on withdrawal timing, ISTAXPro will accurately report disaster-related distributions on your tax return if you use this provision.

Yearly Filings: 1099/recipient

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Insurance Payouts and Deferring Gains

If you receive insurance proceeds for destroyed property or equipment, Section 1033 may allow you to defer capital gains taxes if you reinvest in similar property within the allowed period (typically two years).

This provision can help doctors replacing imaging equipment, dental chairs, or practice property manage their cash flow during recovery.

Why Accurate Filing Matters After a Disaster

Disasters disrupt practice operations and add financial stress, but capturing eligible disaster-related tax relief can:

Improve cash flow during recovery.
Reduce your overall tax burden for the year.
Ensure compliance while supporting your practice’s stability.

At ISTAXPro, we accurately record casualty losses, equipment replacements, and qualified distributions in your bookkeeping and tax returns to ensure your filings reflect your situation while complying with IRS guidelines.

Income Tax: Single Member LLC + Basic

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