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Special tax laws may help taxpayers recover from the financial impact of a disaster. There is even more help when the President declares a location to be a major disaster area. When disaster strikes an area, the IRS may grant additional time to file returns and pay taxes.
Both individuals and businesses in an official disaster area can get a faster refund by claiming the losses from the disaster on the tax return for the previous year. This is usually done by filing an amended return. See the IRS Web site for more information about disaster assistance and emergency relief. To access the latest disaster tax information, go to www.irs.gov and use the key word “disasters.”
The IRS offers disaster kits for individuals and businesses that have been affected by a major disaster or emergency. The kits assist you in claiming losses on property that was destroyed by a natural disaster. Of course, you can’t take the benefits if you have already been reimbursed. Individuals that have sustained losses in a disaster should see Publication 2194, Disaster Losses Kit for Individuals, and Publication 584, Casualty, Disaster and Theft Loss Workbook. See Publication 2194-B, Disaster Losses Kit for Businesses and Publication 584-B if your business has sustained losses because of a natural disaster.
Government Agency Disaster Information
Federal disaster aid programs are provided by the Federal Emergency Management Agency (FEMA). These programs are available to citizens affected by major disasters. Also, the Small Business Administration (SBA) provides financial assistance to homeowners, renters and businesses that are located in a disaster area. The assistance is supposed to be affordable and easy to access. For example, the SBA will offer low-interest, long-term loans for losses that are not fully covered. Go to READY.gov to learn how to prepare for and respond to disasters and emergencies.
IRS Forms and Publications and Information
IRS Forms and Publications
The following additional forms and publications on the IRS Web site may 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 also 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. The workbook is a tool for listing all personal and non-real estate items lost in the disaster.
- Publication 584B, Business Casualty, Disaster and Theft Loss Workbook. This workbook can be used to help you figure out the loss on business property destroyed during a natural disaster.
- 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
The following sections on the IRS web site may provide information that may be useful in regards to disaster relief:
FAQs for Disaster Victims. Contains current information on disaster relief and frequently asked questions.
Tax Relief in Disaster Situations. Discusses special tax law provisions that may help taxpayers recover financially from the impact of a disaster.
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 damage to your property from any sudden, unexpected and unusual event. This may include things such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption.
Questions for Your Attorney
- Have you ever handled cases involving tax relief in disasters?
- How long will it take to receive a refund after I amend my return?
- Do all of the tax relief programs require that the President declare a disaster?