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Disaster Tax Relief Guide
Tax Assistance for Disaster Situations
The IRS provides tax relief to individuals and businesses affected by federally declared disasters, such as wildfires, hurricanes, floods, or tornadoes. This relief includes automatic extensions for filing tax returns and making payments, as well as potential deductions for disaster-related losses.
Automatic Extensions
Taxpayers in disaster-affected areas receive automatic extensions to file returns and make payments. For example, individuals and businesses impacted by recent disasters have until May 1 or October 15 to file returns and make payments without accruing fees or interest.
Casualty Loss Deductions
Victims may qualify for casualty loss deductions for property damage, lost income, or uninsured losses. These deductions can be claimed using IRS Form 4684 and may be applied to the current or previous tax year.
Documentation
To support disaster claims, it’s important to save photos and videos of damaged property, receipts related to repairs, and original purchase records. To find the forms required for documenting losses in the event of a disaster, visit the Publication 584 resource page on the IRS website.
Scam Awareness
The IRS warns against scams where fraudsters pose as IRS or FEMA representatives. The IRS never contacts taxpayers by email, text, or social media. Be cautious of unsolicited communications and verify correspondence through official IRS channels.
Disaster Relief Eligibility
To find out if your home or business is an area that qualifies for disaster-related tax relief, visit the IRS’s official “Around the Nation” disaster relief page. There you’ll find the IRS’s comprehensive list of all disaster areas in the U.S. along with details that explain the specific tax relief available for each disaster area.
Disaster Preparation Tips for Taxpayers and Businesses
Natural disasters strike with little or no warning. Here are some actions you can take now that’ll have you better positioned should you or your business be affected by a disaster.
Electronic Recordkeeping
Utilize paperless methods by scanning important documents like tax returns and W-2s, and storing them securely in digital formats. Regularly back up these files and keep copies in separate, safe locations.
Emergency Planning
Fiduciary Bonds
Employers using payroll service providers should verify the presence of fiduciary bonds to protect against potential defaults.
For more information on how to prepare your financial records in case of disaster, visit the IRS’s official disaster preparedness page.
My Financial Files Were Destroyed In A Disaster.
How Can I Rebuild Them?
The loss of some, or even all, of one’s financial records is among the many stressful hardships natural disasters inflict upon people. Rebuilding these records is crucial for substantiating losses, claiming tax deductions, and obtaining federal assistance or insurance reimbursements. Here are some helpful tips on reconstructing your financial records.
Tax
Records
- Access your tax records for free via your online IRS account. You can also request them by mail or by phone. For details, visit irs.gov/individuals/get-transcript.
- Request copies of past returns by filing IRS Form 4506 or transcripts by filing IRS Form 4506-T.
- To expedite processing of mail-in requets, write the appropriate disaster designation (e.g., “HURRICANE HARVEY”) in red letters across the top of your forms.
Personal Residence
& Real Property
- Contact the title company, escrow company, or bank that handled the purchase of your home or other property to obtain documents related to property ownership.
- If you made home improvements, reach out to the contractors who did the work for statements to verify the work and cost.
- Gather written descriptions from friends and relatives who saw the house before and after any improvements.
Financial
Statements
- Retrieve past statements from your credit card company or bank, which may be available online.
- If online access is unavailable, contact your bank to request paper copies of these statements.
Insurance
Information
- Contact your insurance company for copies of policies and records of claims filed.
- These documents can help establish the value of property and the extent of losses.
Photographic
Evidence
- Use photographs or videos taken before and after the disaster to document the extent of damage.
- This visual evidence can support claims for insurance and tax purposes.
Casualty Loss
Deductions
- Determine if you qualify for a casualty loss deduction by consulting IRS guidelines.
- To properly report losses on your IRS tax return, use IRS Form 4684.
For more detailed information and resources, visit the IRS’s official page on reconstructing records after a disaster.
Need help accessing your IRS transcripts?
Optima Tax Shield can do that for you!
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Let Optima Tax Relief Help
Call 1-800-536-0734 for a free consultation.