When severe weather damages your home, it can feel like there is no way you can catch up financially. Insurance fights and expensive repairs can put you underwater, and you may feel overwhelmed. Luckily, there are ways to gain back some ground to help you recover. The IRS offers tax relief for storm victims. Here are some ways you can take advantage of these tax relief measures.
Tax Relief for Storm Victims: What You Need to Know
The IRS offers four types of tax relief for storm victims:
- Extended deadlines for filing: Storm victims in a federally declared disaster area can take advantage of an extended deadline for filing their taxes. The IRS may reduce penalties and interest payments during this period. In addition, the IRS may forgive penalties on payroll and excise tax returns if filed before the due date.
- Free access to retirement accounts: Storm victims can borrow up to $100,000 from their retirement accounts to pay for repairs.
- Casualty deductions: If storm victims suffer casualties in a presidentially declared disaster, they may qualify for deductions for damages not covered by insurance. To claim, use Form 4684.
- Faster access to tax returns: Taxpayers and businesses in disaster areas can claim disaster losses on the tax return for the previous year and receive their refunds in an accelerated time frame. This is usually accomplished by filing an amended tax return.
How to Claim Disaster Tax Relief
The rules for claiming disaster tax relief are simple. If you are filing in any federally declared disaster area, you are eligible for disaster tax relief measures. To claim them, call the Disaster Assistance Hotline at 1-(866)-562-5227, tell the operator your records are in a covered disaster area, then give the operator the FEMA number of the county you are filing in.
What to Do if You Are Penalized
If you are filing in a federally declared disaster area and you receive a payment penalty notice, there are ways you can have many of these penalties waived or reduced. For any taxpayer who receives a late filing date, double-check the payment penalty notice. If the notice says you filed your taxes late but you’re still within your postponement window, call the IRS and ask them to waive the penalty.
If you were affected by the disaster but live outside the federally declared disaster area and are assigned penalties, call the IRS. This will let you see if you are eligible for disaster tax relief measures and can have your penalties waived or reduced.
Protect Your Tax Documents
If you live in an area prone to natural disasters, it is wise to back up your tax documents electronically. This will save you time and headaches when trying to navigate tax season after being affected by a disaster. If you lost critical tax documents in a disaster, you can obtain a free copy or transcript of your previously filed tax return(s) from the IRS. To do this, submit Form 4506, Request for Copy or Transcript of Tax Form.
Get Help from Tax Pros
If you were affected by a storm and don’t know if you qualify for tax relief for storm victims, get the pros involved. At Levy & Associates Tax Consultants we can help you determine your tax status and help you navigate a tough tax season. We’ll go to bat for you with the IRS and clear red tape from the process for you. Contact us today to get the help and the tax return you deserve.