Recently, a storm hit the area of Florida which caused the loss of lives. IRS (Internal Revenue Service) has recently issued a news release to assist people from disaster-affected areas. The IRS is offering assistance to the area designated by FEMA (Federal Emergency Management Agency).
FEMA supports citizens and emergency personnel to build, sustain, and improve the nation’s capability to prepare for, protect against, respond to, recover from, and mitigate all hazards. Individuals or households or businesses in disaster-affected areas can use those reliefs from the IRS.
IRS has extended the due date to file the return from 18th April to 15th August to file the tax returns and also pay the taxes if any. It can be extended without filing Form 4868 if you are living in disaster-affected areas designated by FEMA.
It also includes that eligible persons can make contributions to IRAs and HSAs till the extended due date of 15th August and can claim the respective tax benefits in the tax return assuming the contributions to IRAs and HSAs made on time i.e. 31st March.
The extended due date of 15th August also applies to the quarterly estimated tax payments normally due on April 18 and June 15 and quarterly payroll and excise tax deposits normally due on May 1 and July 31.
If the taxpayer wants more time to file taxes then he/she can file form 4868 (Application for Automatic Extension of Time To File U.S. Individual Income Tax Return) and get the extension to file up to 16th October but taxes need to be paid on before 15th August otherwise IRS may impose interest and penalties on the late filing of taxes.
If an eligible taxpayer receives any notice from IRS for the payment of interest and penalty for the non-payment of taxes within the due date applicable to all except disaster-affected areas designated by FEMA, they can make a call to the IRSon the contact number mentioned on the notice and IRS drops those claims considering this extended due date.
An eligible taxpayer can also claim the casualty loss that occurred due to the storm in the current year or the previous year and claim a refund from the IRS.
Casualty loss can be considered as lost or damaged property due to the storm. As per IRS, A casualty loss can result from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or volcanic eruption.
A casualty doesn’t include normal wear and tear or progressive deterioration. Casualty and theft losses can be claimed as an itemized deducted Form 1040, Schedule A. Form 4864 is used to claim the casualty loss and the IRS has also issued separate instructions for that.
When the calculation of casualty loss is made, it is necessary to reduce the salvage value if any, and claim received from insurance companies.
I would like to mention one more thing here to make it easier, Hurricane Ian is a federally declared disaster but the limitation of 10% of Adjusted Gross Income(AGI) continues so you can claim casualty loss up to 10% of AGI subject to $100 as the loss from Hurricane Ian is not listed as qualified disaster loss.
Cash flow is a measure of how much cash a business brought in or spent in total over a period of time. Cash flow is typically broken down into cash flow from operating activities, investing activities, and financing activities on the statement of cash flows, a common financial statement.
If any taxpayer relocates from the disaster-affected areas due to any reasons, then he/she/it needs to inform IRS by filing form 8822 (Change of Address For Individual, Gift, Estate, or Generation-Skipping Transfer Tax Returns) which helps IRS to track individuals and entity in a systematic manner.
If you forgot to inform IRS about the change in address, you may miss out the important communication from IRS. It can also impact the future relief from IRS based on area. For more information on the above topic, you can refer to the IRS website.