Every year our nation faces various natural disasters that create havoc and leave many people homeless and helpless. 2012 was no exception, with Sandy, wildfires and flooding damaging different parts of the country. As a result there were 112 federal disaster declarations and some relief may be available to those living in the affected areas.
People affected by a federally declared disaster can:
- Claim disaster-related casualty losses on their federal income tax return for this year or the previous year. Claiming the loss on an original or amended return for 2012 will result in quicker refunds, but waiting to claim the loss the current year’s return could result in greater tax savings, if all factors cooperate.
- If claiming the refund in last year’s returns, don’t forget to fill the Disaster Designation (“Hurricane—–” or “—– Wildfire”) on top of the form so that the IRS can expedite the processing.
- Deduct disaster-related losses in their personal property that are not covered by insurance (the IRS requires that the first $500 in losses be deducted from any claims).
- Extended tax filing and payment deadlines. The IRS has promised to negate any interest, late-payments or penalties that are otherwise applicable. Those affected are not required to contact the IRS as this relief is automatically awarded to all taxpayers located in the affected areas.
- Apart from this, the IRS reviews each cases related to people living outside the disaster areas but whose records or tax professionals are located in the affected areas. Such taxpayers should call the IRS disaster hotline at 1-866-562-5227 to request tax relief.
- The IRS has also waived the fees for copies of previously filed tax returns for affected tax payers. Applicants should remember to write the assigned Disaster Designation (“Hurricane—–” or “—– Wildfire”) in red ink at the top of the IRS Form 4506 or 4506-T before submitting it to the IRS.
- Additionally, workers who have assisted/are assisting in disaster stricken areas may also be eligible for tax relief.
Please contact us for help with filling out your IRS Form 4506 or 4506-T before doing your taxes this season.