Tax Relief When Disaster Strikes

Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the President declares their location to be a major disaster area. Depending on the circumstances, the IRS may grant additional time to file returns and pay taxes. Both individuals and businesses in a presidentially declared disaster area can get a faster refund by claiming losses related to the disaster on the tax return for the previous year, usually by filing an amended return. See the IRS Web site for additional information about disaster assistance and emergency relief for individuals and businesses. To access the latest disaster tax information go to www.irs.gov, and use the key word "disasters."

Disaster Kits

If you were affected by a major disaster or emergency, the IRS has a Disaster Losses Kit that can help you claim unreimbursed casualty losses on property that was destroyed by a natural disaster. The IRS offers disaster kits for individuals and businesses. See Publication 2194, Disaster Losses Kit for Individuals and Publication 2194-B, Disaster Losses Kit for Businesses, which contain tax forms and publications that assist the taxpayer to claim a casualty loss on property that was destroyed by a natural disaster.

The kit for individuals contains Publication 584, Casualty, Disaster or Theft Loss Workbook (Personal Use Property) and the business kit contains Publication 584-B, Business Casualty, Disaster, or Theft Loss Workbook. Both are useful tools that can help the taxpayer compile a list of all personal and non-real estate items that were lost in the disaster.

Government Agency Disaster Information

Federal Emergency Management Agency (FEMA). Federal disaster aid programs provided by the Federal Emergency Management Agency (FEMA) are available to citizens affected by major disasters.

Small Business Administration (SBA). The U.S. Small Business Administration (SBA) is responsible for providing affordable, timely and accessible financial assistance to homeowners, renters and businesses of all sizes located in a declared disaster area. Financial assistance is available in the form of low-interest, long-term loans for losses that are not fully covered by insurance or other recoveries.

READY.gov. Learn how individuals and business can prepare for and respond to all kinds of disasters and emergencies.

IRS Forms and Publications

The IRS has the following forms and publications on their Web site to assist you with disaster recovery:

• Publication 1600, Disaster Losses - Help from the IRS. This brochure highlights federal tax treatment of disaster area losses for individuals and business owners.
• Publication 547 - Casualties, Disasters and Thefts. Publication 547 explains how to treat casualties, thefts, and losses on deposits. It discusses definitions, how to figure gain or loss, how to treat reimbursements, and how to report them.
• Form 1040X, Amended U.S. Individual Income Tax Return.
• Publication 584, Casualty, Disaster and Theft Loss Workbook.
• Publication 584B, Business Casualty, Disaster and Theft Loss Workbook.
• Publication 2194, Disaster Losses Kit for Individuals.
• Publication 2194B, Disaster Losses Kit for Businesses.
• Publication 3067, Disaster Assistance.
• Publication 3833, Disaster Relief: Providing Assistance through Charitable Organizations.

Additional IRS Information:

FAQs for Disaster Victims. This article contains current information on disaster relief and frequently asked questions.

Tax Relief in Disaster Situations. Special tax law provisions may help taxpayers recover financially from the impact of a disaster, especially when the President declares their location to be a major disaster area.

Around the Nation. Provides IRS news specific to local areas, primarily disaster relief or tax provisions that affect certain states.

Tax Topic 515-Casualty, Disaster, and Theft Losses. Provides information about casualty losses that result from the destruction of or damage to your property from any sudden, unexpected, and unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption.

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