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

September 7 Everyone
Federal Holiday (Labor Day) - Details

September 10 Employees who work for tips
If you received $20 or more in tips during August, report them to your employer - Details

September 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 August.

September 14 Regular method taxes
Deposit the tax included in amounts billed or tickets sold during the last 16 days of August.

September 15 Individuals
Make a payment of your 2015 estimated tax if you are not paying your income tax for the year through withholding (or will not pay in enough tax that way). Use Form 1040-ES. This is the third installment - Details

September 15 Corporations
File a 2014 calendar year income tax return (Form 1120) and pay any tax, interest, and penalties due. This due date applies only if you timely requested an automatic 6-month extension - Details

September 15 S Corporations
File a 2014 calendar year income tax return (Form 1120S) and pay any tax due. This due date applies only if you timely requested an automatic 6-month extension - Details

September 15 Partnerships
File a 2014 calendar year return (Form 1065). This due date applies only if you were given an additional 5-month extension - Details

September 15 Corporations
Deposit the third installment of estimated income tax for 2015 - Details

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

September 15 Nonpayroll withholding
If the monthly deposit rule applies, deposit the tax for payments in August.

September 25 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 August.

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

September 29 Regular method taxes (special September deposit rule)
Deposit the tax for the period beginning September 16 and ending September 26.

September 29 Communications and air transportation taxes under the alternative method (special September deposit rule).
Deposit the tax included in amounts billed or tickets sold during the period beginning September 1 and ending September 11.

September 30 Wagering tax
File Form 730 and pay the tax on wagers accepted during August.

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

View More Tax Dates