How Does A Natural Disaster Affect Your Taxes?
- June 5, 2019
- Posted by: asal
- Category: Tax Relief
With hurricane and tornado season upon us, it’s time to understand our natural disaster tax relief options better. When a natural disaster hits, there’s never enough help available it seems. We are fortunate in the U.S. to have food and shelter during a natural disaster, but it’s not always enough. No one can reverse the damage done by tornadoes, floods, fires, and other natural disasters. It can take years to recover from a natural catastrophe fully. However, when it’s time to rebuild, we can’t ignore any help we can get. One of the least-utilized forms of aid is tax relief. Many people aren’t aware of tax resolution options as a result of a natural disaster. If you’re eligible for natural disaster tax relief, it can save you thousands.
Below are tips on natural disaster tax relief the IRS provides. For help understanding your natural disaster tax relief options, contact Platinum Tax Defenders.
Who qualifies for Natural Disaster Tax Relief?
Anyone whose tax records are in a federally designated disaster area is considered an “affected taxpayer” by the IRS. Those affected by natural disasters are eligible for exclusive benefits. Eligible persons include:
- Business owners
- Sole proprietors
- Business entities
- Any shareholder in an S Corporation
Also, if your tax preparer is in a disaster area, you may qualify to have your return postponed or extended.
How to qualify for tax extensions during a Natural Disaster
To be eligible for tax extensions during a natural disaster, the IRS requires that you do the following:
- Call the Disaster Assistance Hotline at 1-866-562-5227
- Explain that your tax documents are in a covered disaster area
- Provide the FEMA Disaster Number of the county in which your tax preparer resides
Tax Relief Options for Taxpayers Affected by Natural Disasters
Below are a few tax resolution options the IRS offers for those affected by natural disasters.
Unrestricted access to retirement accounts
The IRS allows affected taxpayers to borrow up to $100,000 for a qualified employer retirement plan. Retirement account funds can be used to help pay for damage and get individuals’ lives back on track. The standard limit is the lesser of $50,000 or 50% of their vested total. Affected taxpayers can also skip paying the 10% early withdrawal penalty for retirement accounts. If you’re wondering whether you’re eligible for this tax relief options, contact a tax attorney.
The extended tax filing deadline
When natural disasters hit, the IRS may give affected taxpayers an extension on filing their tax returns. For 2017, taxpayers affected by hurricanes and wildfires had until January 31, 2018, to file their taxes. The standard six-month extension for filing was October 16, 2017. However, the extension doesn’t allow them to avoid penalties on any tax payments that were due. Business and sole proprietors were also able to postpone their September and January estimated quarterly tax filings. For those taxpayers wondering if they’re eligible for natural disaster tax relief, contact a tax attorney.
Claim the previous year’s income for the Earned Income Tax Credit and Child Tax Credit
Taxpayers affected by natural disasters in 2017 were able to claim their past year’s salary on their 2017 taxes. Those affected taxpayers benefited from the Earned Income Tax Credit and Child Tax Credit. The tax resolution option allowed lower-income families to recoup some of the income they lost due to not working.
If your home suffers damage as a result of a natural disaster, you can deduct the amount of damage done. First, the taxpayer must subtract $100 from the amount of damage caused. Then, take away 10% of your adjusted gross income. Also, taxpayers can only deduct any amount that insurance doesn’t cover. For those who have insurance but fail to file a claim, they cannot take the deduction. Taxpayers can take the deduction for the year the damage occurred or amend a previous tax return.
The latter option is for those who were in a “federally declared disaster area,” according to the IRS. It’s essential to keep all receipts and documents related to the damage done. You will need to provide evidence to the IRS that the natural disaster caused a considerable loss. If you’re attempting to negotiate a deduction with the IRS, contact a tax resolution professional.
If you volunteer or send supplies to aid victims of natural disasters, you can deduct the following on taxes:
- Cost of driving
- Shipping as it relates to your volunteering
Taxpayers should also log their miles and keep all related receipts.
How to get help with natural disaster tax relief?
The tax code can get complicated when factoring in individual natural disaster deductions. For effective tax relief solutions during a natural disaster, consult with a tax relief specialist. A tax resolution specialist can help you determine for which form of tax relief you’re eligible. Tax attorneys can also assist you in settling back taxes when faced with a natural disaster. Having back tax debt is enough of a problem. When you add a natural disaster to the mix, owing back taxes becomes a lot worse. However, there is help you can get when looking for natural disaster tax relief. A tax attorney who has experience in natural disasters can help you get the aid you need to get your life back in order.
Call Platinum Tax Defenders For Natural Disaster Tax Relief
Hiring a tax relief specialist can get you a better deal when seeking natural disaster tax relief. A tax attorney can help you get the aid you need and also save you money on back taxes. The tax resolution specialist can also negotiate with the IRS on your behalf and submit the necessary paperwork. A natural disaster can leave you in bad financial shape. That’s where a tax relief services company can come in handy. A tax relief specialist understands the complicated tax code, especially during natural disasters. You might have already lost your home, don’t lose your financial health, too. If you’ve been affected by a natural disaster, call Platinum Tax Defenders for a free consultation today.