As a business with one of our locations in Florida, we are all too familiar with the ways a hurricane can flip your life upside-down. This year has already been devastating, with both Hurricane Harvey and Hurricane Irma ripping through Texas and Florida.
Thankfully, for those affected by natural disaster, the IRS offers some relief. It is important for anyone who has suffered financial losses as a result of the storm to be aware of these tax strategies.
IRS Extends Filing Deadlines for Hurricane Victims
In the aftermath of a natural disaster, the IRS will routinely ease filing deadlines for those who were affected. In the case of Hurricane Irma and Harvey, those in affected counties who were on extension to file their 2016 returns have now been granted an additional tax extension on some individual and business tax returns and tax payments. Victims who had extensions now have until January 31st to file without penalty. To find the areas in which the IRS has granted tax relief, you can visit their Tax Relief in Disaster Situations page. Taxpayers with an address in any of the specified disaster areas will automatically be given relief by the IRS and will not need to contact them. However, if you still receive a penalty notice from the IRS and you live in one of the affected areas, we recommend calling the phone number on the notice to make sure the penalty will actually be abated.
Make Copies and Keep Detailed Records
We highly recommend having copies of all your important documents saved in a different location than your originals. At Walsh & Associates, we keep copies of any financial documents you provide – including estate documents and tax documents. Other options include storing copies on the cloud, or a fire and water proof security box.
It is also good practice to take up-to-date pictures of all valuables and appliances in your home that are of high value. These pictures will be incredibly useful should you have to make an insurance claim. Individuals who have an uninsured or un-reimbursed disaster-related loss can claim these losses on their tax return for the year the loss happened or on the prior year’s return if the total gross income for each year is comparable.
Your Deductible Casualty Loss
If you do end up having to claim a deduction for the destruction of your possessions or property, you’ll need to determine the fair market value of property damaged or lost immediately before and after the hurricane. We know that some of the items lost may have significant sentimental value, but that can sometimes get in the way of a proper appraisal. In these instances, a professional appraisal can be a good idea.