Natural disasters: Preparing for them and their impact on your taxes

Man repairing ceiling

(NAPS) — From floods and wildfires to tornadoes and hurricanes, natural disasters can leave a path of devastation. Although you can't prevent natural disasters, you can minimize losses with proper preparation and tax relief.

Natural disaster preparation involves much more than a survival kit with first aid, food and water. "Individuals and businesses need to remember to protect their financial data and documents," says Jessi Dolmage, spokesperson for TaxACT. "Taking time to document and save information now saves time, money and stress if a natural disaster occurs."

Take a room-by-room inventory of your personal and business belongings, especially property of greater value. Document, photograph or video record belongings for proof of value for insurance, tax and casualty loss purposes. The Internal Revenue Service (IRS) offers workbooks to help individuals and businesses with inventory. Publication 584 is available at www.irs.gov.

Save electronic copies of inventory and other documents on an external drive, CD or secure website. Documents should include home closing statements, homeowner and other insurance records, tax returns and W-2s. Keep copies in multiple locations in case your home, business or nearby sites are destroyed.

The IRS often grants individuals and businesses in federally declared disaster areas extended tax return filing and payment deadlines, as well as lesser or waived penalties. Deadlines for contributing to individual retirement accounts can also be extended, and the IRS usually waives the $57 fee for copies of previous year tax returns.

Individuals and businesses in affected areas typically don't have to contact the IRS to receive tax relief, as the agency automatically identifies you. However, if you have property in the designated area but reside or have a business outside of the designated area, call the IRS disaster hotline to request relief. If you move, remember to notify the IRS of your new address.

Casualty losses related to your home or business, household items and vehicles not covered by insurance or other reimbursements may be deductible on your federal tax return. To determine the deductible amount for each item, the IRS requires you first subtract any insurance reimbursement from the value of the item and then $100. The total of all losses is then reduced by 10 percent of your adjusted gross income. Keep in mind, casualty does not include normal wear and tear or progressive deterioration.

Depending on when the federally declared disaster happens, you may have the option of claiming related losses on the previous or current year's return. Dolmage explains, "Casualty losses for federally declared disasters can be claimed as a miscellaneous deduction. So, if you claimed the standard deduction last year and your casualty loss plus other itemized deductions total more than the standard deduction, you may benefit more from amending last year's return."

Amending last year's return can mean faster cash for repairs, rebuilding and replacing personal property. However, depending on your income the year of the disaster, you may increase your tax savings by waiting to claim losses on the current year return.

Regardless of which return you claim losses on, keep detailed documentation and receipts. More disaster preparation tips and resources can be found at www.irs.gov.

Tax preparation solutions like TaxACT provide step-by-step guidance for amending last year's return and claiming losses on your current year return. Learn more about TaxACT at www.taxact.com.

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Upcoming Tax Dates

April 10 Employees who work for tips
If you received $20 or more in tips during March, report them to your employer. You can use Form 4070.

April 10 Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the first 15 days of March.

April 14 Regular method taxes
Deposit the tax for the last 16 days of March.

April 15 Individuals
File a 2014 income tax return (Form 1040, 1040A, or 1040EZ) and pay any tax due. If you want an automatic 6 month extension of time to file the return, file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. For more information, see Form 4868. Then, file Form 1040, 1040A, or 1040EZ by October 15.

April 15 Individuals
If you are not paying your 2015 income tax through withholding (or will not pay in enough tax during the year that way), pay the first installment of your 2015 estimated tax. Use Form 1040ES.

April 15 Household Employers
If you paid cash wages of $1,800 or more in 2014 to a household employee, you must file Schedule H - Details

April 15 Partnerships
File a 2014 calendar year return (Form 1065) - Details

April 15 Partnerships
Electing large partnerships: File a 2014 calendar year return (Form 1065-B) - Details

April 15 Corporations
Deposit the first installment of estimated income tax for 2015 - Details

April 15 Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in March.

April 15 Nonpayroll withholding
If the monthly deposit rule applies, deposit the tax for payments in March.

April 15 Household employers
If you paid cash wages of $1,900 or more in 2014 to a household employee, you must file Schedule H (Form 1040). If you are required to file a federal income tax return (Form 1040), file Schedule H (Form 1040) with the return and report any household employment taxes. Report any federal unemployment (FUTA) tax on Schedule H (Form 1040) if you paid total cash wages of $1,000 or more in any calendar quarter of 2013 or 2014 to household employees. Also, report any income tax you withheld for your household employees.

April 27 Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the last 16 days of March.

April 29 Regular method taxes
Deposit the tax for the first 15 days of April.

April 30 Social security, Medicare, and withheld income tax
File Form 941 for the first quarter of 2015. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until May 11 to file the return.

April 30 Federal unemployment tax.
Deposit the tax owed through March if more than $500.

April 30 Form 720 taxes
File Form 720 for the first quarter of 2015.

April 30 Wagering tax
File Form 730 and pay the tax on wagers accepted during March.

April 30 Heavy highway vehicle use tax
File Form 2290 and pay the tax for vehicles first used in March.

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