Other People's Money
Back to library
Loophole

§139 Qualified Disaster Relief Payments

Tax-free C-corp payments to employees during federally declared disasters.

Overview

During a federally declared disaster, your C-corp (or S-corp) can pay employees for reasonable personal, family, and living expenses — 100% deductible to the company, 100% tax-free to the employee, with no payroll tax. No receipts required if amounts are reasonable.

Best fit
Business ownersS-corp/C-corp owner-employeesDisaster zones
Estimated impact
~40% combined tax on the payment (income + FICA)

Click Generate advisory deep dive for mechanics, IRC citations, a step-by-step execution plan, a worked numeric example on your profile, costs, risks, and this-week actions.

More loophole strategies

See all Loophole strategies
OPM