As Texans, we know all too well the impact that severe weather can have on our lives and communities. This year, we’ve faced two significant challenges: Hurricane Beryl and the May derecho that swept through the Houston area. In the wake of these natural disasters, it’s crucial to understand how they affect your taxes and what relief options are available to you.
Federal Disaster Declarations: What They Mean for You
The good news is that both Hurricane Beryl and the May derecho have been declared federal disasters by the President. This designation opens the door to various forms of tax relief for those affected. Here’s how this can benefit you:
Extended Deadlines: More Time to File and Pay
If you live in one of the affected areas, the IRS has extended deadlines for filing and paying your taxes. This includes individual, corporate, and business tax returns. Whether it’s your quarterly estimated tax payments or payroll tax deposits, you may have extra time to get everything in order. It’s a small relief, but one that can make a big difference in times like these.
Casualty Loss Deductions: A Chance to Recover
If you’ve suffered property losses due to these disasters, you might be eligible to claim those losses on your federal income tax return. You can choose to report these losses on your 2023 or 2024 tax return, depending on what benefits you most. Personal property losses that aren’t covered by insurance or other reimbursements can be deducted using Form 4684, “Casualties and Thefts.” This can help ease the financial burden of recovery.
Penalty Abatement: Avoiding Extra Charges
The IRS is offering penalty abatement for payroll and excise tax deposits due during the disaster period. As long as these deposits are made by the extended deadlines, you won’t face penalties, giving you some breathing room as you focus on getting back on your feet.
Automatic Identification and Relief: What You Need to Know
The IRS will automatically identify taxpayers located in the disaster area, applying filing and payment relief without you needing to do anything. However, if you’re outside the designated area but have still been impacted, you should contact the IRS disaster hotline to request relief.
Special Disaster Distributions: Accessing Retirement Funds
In some cases, you may be eligible for special disaster distributions from your retirement plans or IRAs. These distributions are not subject to the additional 10% early distribution tax, and the income can be spread over three years. This can provide much-needed financial flexibility in the wake of a disaster.
Expedited Processing for Refunds: Faster Access to Your Money
For those claiming disaster losses, the IRS is expediting the processing of refunds. Be sure to include the disaster designation and FEMA declaration number on your tax return to take advantage of this quicker turnaround.
Specific Relief Measures for Hurricane Beryl and the May Derecho
- Hurricane Beryl: If you’re in the designated counties, you have until the extended IRS deadline to file most tax returns and make tax payments. Casualty losses can be claimed on either your 2023 or 2024 tax return.
- May Derecho: Similar relief measures apply, including extended deadlines for filing and payment, penalty abatement, and the option to claim casualty losses on the 2023 or 2024 tax return.
Action Steps: What You Should Do Next
- Document Your Losses: Keep detailed records of all disaster-related losses and expenses. This documentation is crucial for claiming deductions and receiving relief.
- File for Extensions: Take advantage of the extended deadlines for filing and payments to ensure you have all your information in order.
- Claim Casualty Losses: Use Form 4684 to report personal property losses and reduce your taxable income.
- Seek Assistance: If you’re outside the designated disaster area but affected, contact the IRS disaster hotline for possible relief.
By staying informed and taking proactive steps, you can better manage the financial impact of these natural disasters. For more detailed information, visit the IRS pages on Disaster Assistance and Emergency Relief for Individuals and Businesses and Tax Relief for Texas Victims of Severe Storms and Flooding.
If you have any questions or need further assistance, our office is here to help. Don’t hesitate to reach out—we’re committed to supporting you through these challenging times.
Disaster Assistance and Emergency Relief for Individuals and Businesses and Tax Relief for Texas Victims of Severe Storms and Flooding.
