Finding Tax Relief in Disaster Situations

Finding Tax Relief in Disaster Situations

May 02, 2022

The U.S. has sustained over 310 weather and climate disasters since 1980, with the cost reaching more than $2.155 trillion dollars in damages. That is only the natural disaster side of the equation. Every day it seems we turn on the news, and there is another violent situation, possible bomb threat, or soaring Covid numbers. Between all of these concerns, getting your taxes out on time seems like a minor issue compared to the loss of home, job, and family.  We at Green Valley Tax can help to determine what is needed to receive your disaster relief. 

That is why the IRS runs a series of tax relief scenarios and programs to ensure every citizen is given the leeway to handle their own affairs, especially for situations well beyond their control. Does this mean you get complete carte blanche in never having to file your taxes? Probably not. But there is help available, and it is a good idea to take advantage of what you can when life has dealt a harsh card. 

Tax Extensions with Natural Disasters

Probably the most common situation that will arise from a natural disaster is an extension of the business and personal tax deadline. In a typical year, you would expect to file your taxes on or before April 15th. The government gives you extra time during a disaster because you have more important things to deal with first.  

For example, the date to file your 2020 tax documents was extended from April 15, 2021, to May 17, 2021. This was to help people handle life during the harshness of the global pandemic. Even if you had prepared everything you needed, businesses could still not send out the correct information on time, causing all kinds of delays.

 Most natural disasters fall into the categories of:

  • Hurricanes
  • Earthquakes
  • Tornadoes
  • Severe Storms
  • Flooding
  • Landslides
  • Mudslides
  • Droughts
  • Snowstorms
  • Wildfires 

Your state governor or the President of the United States can also declare emergency and disaster areas that are often recognized by the IRS. 

Victims Benefits

In some cases, the IRS allows federally declared disaster areas to receive financial aid that will not be taxed later on when filing. You can see questions on tax forms related to major disasters over the previous decades pertaining to items like this. A good example would be floods or hurricane damage in southern states like Florida, Alabama, Georgia, and Louisiana. There was even state-level tax relief for Texas due to the recent winter freezing issue affecting so many businesses and private homes. 

A special provision known as the “casualty loss deduction” allows some victims to file an amended return for the previous year. This is to help get refunds out quicker to those in need. It does not translate to a dollar-for-dollar reimbursement but reduces the tax obligation and helps put cash in people’s pockets when they need to conduct repairs. 

Who Qualifies for Tax Relief?

Anyone filling taxes qualifies if they lived or did business within a declared disaster area. Most of the time, this is for federally declared issues, but there are some local state programs that you can find. You can also declare losses for the year it occurred within or the previous tax year. You have the option to go with whatever is more beneficial for your situation. 

As you can imagine, this does lead to some people trying to take advantage of the situation, so be sure to have all of your documentation in order before filing. You are going to want to verify everything in case you get a letter requesting more information from the IRS. 

The easiest way to get help with tax relief during a disaster is to work with a team of professional and experienced preparers. At Green Valley Tax Services, we have the skills and know-how to walk you through any available disaster relief extensions, credits, or other situations. Our team is ready to help you get your life back on track. So give us a call today to get started!