Tax deadlines can be nerve-wracking during the best of times. When a natural disaster hits your neighborhood, looming tax obligations can add more stress to an already traumatic situation. In some cases, they may be the last thing on your mind. Such disasters include tornadoes, hurricanes, floods, wildfires, winter storms, and earthquakes.
A natural catastrophe like a tornado, hurricane, wildfire, or earthquake can disrupt your daily routine and place your personal safety in question. In the aftermath of a natural disaster, it might also be difficult to access your personal belongings and important documents, including identification and tax papers.
Fortunately, the Internal Revenue Service (IRS) has established programs to assist taxpayers impacted by natural disasters. Continue reading to learn more about the tax relief available to you if you’ve been affected by a natural disaster.
How Do I Qualify for Tax Relief?
Before the IRS can offer you tax relief, the Federal Emergency Management Agency (FEMA) must issue a major disaster declaration in your region. If you live in a federally declared disaster area, you may be eligible for the casualty loss deduction, which may allow you to get an earlier tax refund.
However, you do not have to live or operate your business in a federally confirmed disaster zone to qualify for payment and filing extensions. If your tax records or tax preparer are located in a FEMA-covered disaster area, you will likely be eligible for disaster-related tax relief.
What Forms of Tax Relief Are Available?
After a natural disaster, you may be eligible for various tax relief options. These range from extended filing and payment deadlines to special grants administered by the Small Business Administration. The IRS offers the following forms of relief to taxpayers impacted by natural disasters:
Tax Extensions
After a catastrophe declaration, the Internal Revenue Service (IRS) often extends tax filing and payment deadlines for those impacted. Also, the IRS will waive penalties for late tax filings and payments submitted before the deadline was extended.
Deductions for Lost or Damaged Property
If your house, automobile, or personal items were damaged in a natural disaster, you might be eligible to claim a casualty loss deduction on your taxes. Generally, the tax deduction equals the property’s reduced value or the property’s adjusted basis. However, before claiming the tax deduction for lost or damaged property, you should be aware of any restrictions and limitations. An experienced tax accountant can help you confirm whether you qualify for this deduction.
Disaster Loans and Grants
The Small Business Administration (SBA) provides financial help to renters, homeowners, business owners, and private nonprofits in a declared disaster zone. You must file all applicable outstanding tax returns before applying for the loan. The SBA’s website has a search function that allows business owners to locate recently declared disasters.
The Bottom Line
There’s a myriad of things to worry about after a disaster strikes, and taxes can easily fall by the wayside. If you’re in a disaster zone, rest assured that there are relief options available to help ease your burden and lessen your stress. If you have questions about tax relief for businesses impacted by a natural disaster, don’t hesitate to reach out to an accounting professional for guidance and support.