Ensuing the tragic events that followed Hurricane Ian, IRS announces Hurricane Tax Relief eligibility for victims.

We are saddened by the tragic events that ensued after hurricane Ian left a trail of destruction across western Cuba and the southeast United States, especially the states of Florida and South Carolina.

Known to be the deadliest hurricane to strike the state of Florida since the 1935 Labor Day hurricane, this life-threatening storm has caused grief in the hearts of many. Hurricane Ian took over 199 lives and destroyed the homes of many more. We would like to extend our deepest condolences to those affected by hurricane Ian.

IRS Hurricane Tax Relief Eligibility For Ian Victims

The Internal Revenue Service (IRS) asserts that the tax relief postpones a number of tax payment and filing deadlines that were set to occur on September 23, 2022. NOTE: To be eligible for the filing extension, a taxpayer must have a qualified extension to file their 2021 return.

Any place that the Federal Emergency Management Agency (FEMA) designates is eligible for the IRS hurricane tax relief programs. Any person or business who resides in Florida, South Carolina, or Georgia falls under this group. The entire list of areas that are eligible is available on the disaster aid page of the IRS website.

To assist you with any inquiries you might have concerning this announcement, we’ve compiled a list of the extended deadlines, possible IRS hurricane tax relief systems, and other details below. 

How the extension affects individuals & businesses

The extension will begin to affect citizens and businesses in Florida, South Carolina, and Georgia on September 23, 2022, in the following ways: 

Individuals who previously had until October 17, 2022 with a valid extension, now have until February 15, 2023 to file (but not pay). The due date is January 17, 2023, while the due date for quarterly estimated income tax payments is February 15. Additionally, the deadlines for filing quarterly payroll and excise tax returns, which were previously set for October 31 and January 31 of 2023, will now fall on February 15.

Businesses have until February 15, 2023, to file and pay any taxes having an original or extended due date after September 23. Tax-exempt organizations are likewise subject to the extended deadline, which also applies to 2021 calendar-year returns which have extensions that expire on November 15, 2022. 

Penalties on excise and payroll tax deposits due after September 23, 2022, but before October 10, 2022, will be waived if made before October 10th, 2022.

If a concerned taxpayer receives a notice from the IRS about a late filing or late payment penalty with an original or extended filing due date and a payment or deposit due date that coincides with the postponement period, the taxpayer should call the number on the notice to request that the IRS waive the penalty. 

When applying filing and payment relief, the IRS seeks to automatically identify taxpayers who are situated in the designated disaster region. However, in order to apply for this tax relief, impacted taxpayers who live elsewhere or have a company that is situated outside the designated disaster region may contact the IRS disaster hotline at 866-562-5227.

Hurricane tax relief eligibility

All Florida, South Carolina, and Georgia residents are automatically eligible. People residing from the aforementioned areas are exempt from making applications for filing, penalty relief, or payment. If your due date is on or after September 23, 2022, and you get a late payment penalty or late filing notice from the IRS, you should call the IRS number on the notification to have your penalty waived. 

If you live outside the disaster area but have documentation there that must be submitted by a certain date to the IRS, the group will work with you to guarantee you are not fined. This also applies to humanitarian workers employed by respectable governmental or nonprofit organizations.

How we can report your losses

Personal property losses that are not covered by insurance or other forms of compensation may be deducted by individuals in a region that has been federally designated a disaster and whose houses or other items have been destroyed or damaged by a storm. The damage caused by Hurricane Ian must be attributable to the regions in Florida, South Carolina, and Georgia that have been designated disaster zones. 

Partially destroyed property will receive the smaller of the following amounts for their hurricane loss:

• We will identify the “adjusted basis” of your property prior to the hurricane . The price you paid for the property is often the adjusted basis. It grows over time for any renovations or additions made and diminishes as a result of depreciation. 

• We will ascertain how the casualty affected the “fair market value” of your possessions. The fair market value, according to the IRS, is the amount at which a piece of property might be offered for sale to a willing buyer on the open market.

Any insurance or reimbursement obtained or anticipated to be received will be deducted once we’ve established the smaller loss amount. As a consequence, a total casualty loss amount is produced for tax purposes. 

In general, any storm losses that take place during the tax year are recorded on Form 4864, Casualties and Thefts, of the federal income tax return. The IRS mandates that a taxpayer deduct $100 from any personal-use property losses they report. Then, 10% of the taxpayer’s adjusted gross income must be deducted from the amount of all casualty losses for the year. We will itemize deductions on Form 1040, Schedule A, and add the deduction on this form to show the entire loss on your tax return.

However, if you have a qualifying disaster loss, we might be able to choose to deduct the loss without having to itemize your deductions. To be eligible for the deduction, your net casualty loss must not be more than 10% of your adjusted gross income. However, after deducting any salvage value and other reimbursements, each casualty loss would be reduced by $500. 

We may be able to deduct hurricane losses brought on by a catastrophe that the government has declared on your tax return in either the year the disaster happened or the year before it. However, there is a deadline to include the casualty loss on the preceding year’s tax return. We have six months from the first due date to revise the preceding year’s return and include the loss deduction.

Disaster tax relief payments

Internal Revenue Code Section 139 permits employers to make qualifying disaster relief payments to workers while treating these payments as business costs that the employee or independent contractor is not required to include in income. The amount paid will not be subject to employment taxes, workers’ compensation, unemployment insurance, or pension payments, and the employer will be allowed to deduct it.

Payments made to owners or families of owners of S corporations or C corporations may be covered by this provision. It might not be applicable to payments made by a partnership to a partner, but it might be if the partner transfers their ownership stake in the partnership to a S corporation before the payment is made.

Furthermore, as long as the loss is not covered by insurance or other sources, funds provided to compensate or pay for reasonable and necessary expenditures incurred for the repair or rehabilitation of a personal dwelling or the replacement or repairs of the belongings of a personal residence or vacation home that are related to the catastrophe may also qualify.

The sums received as Section 139 compensation are also ineligible for deduction as casualty losses. 

If you or your company had disaster-related losses that weren’t covered by insurance or were not paid, you can claim them on either the 2022 tax return (filed in 2023) or the 2018 tax return (2021). Any return alleging a loss must include the FEMA declaration number DR-4673-FL.

Anyone who has experienced a hurricane knows that the destruction and property loss are only a portion of the problem; rebuilding can be extremely expensive and emotionally taxing.

The IRS hurricane tax free relief program is a start to getting back on your feet. If you or anyone you know is suffering during these trying times, we would like to lend you a helping hand and lessen your financial obligations by calculating and providing the required documentation to guarantee you obtain any available hurricane tax relief.