While it is unlikely that a natural disaster – such as an earthquake, drought, forest fire, heavy storm or hurricane – will affect you in your lifetime, over three quarters of a million people are affected in the US each year by these kinds of naturally occurring events. Gathering paperwork and receipts, and getting all your ducks in a row in time for the tax filing deadline can be stressful and time consuming even in the best of times. When a natural disaster strikes your business around the time of a natural disaster, paperwork is the last thing on your mind, but there are a few important things to know to help ease your mind should a disaster strike.
The IRS helps business and home owners who have experienced a natural disaster with extended deadlines and tax credits, the most significant of which is the casualty loss deduction. The casualty loss deduction allows tax payers to receive an accelerated tax refund if they live in an area that has been declared a “federally declared disaster area” by the US President. Some of the details of the casualty loss deductions are:
Tax Extensions: The IRS postpones deadlines for estimates tax payments, as well as for payroll taxes for businesses. Penalties and fees are also usually waived as long as the new post-disaster, extended dates are met. You can always check the IRS website for the most up to date disaster relief announcements.
Tax-free Donation Relief: Those who have been affected by natural disasters are often in need of financial assistance both in the short term and the long term, and there are many organizations who step up to help. The last thing you or your employees need to worry about is the additional burden of paying taxes on money or donations they receive. The IRS has allowed organizations to provide tax-free assistance to employees affected by natural disasters.
Record Keeping with Disaster Tax Relief: We always recommend keeping an electronic back-up of all of your tax-related documents, in the event that the originals are lost to an unforeseen event. It is best to keep the back-up in a separate location that the original documents. You should also keep a record of any damage and repairs that are made to your property. Photos, videos and receipts can help establish property values and validate various claimed deductions. Documentation of payment received from insurance companies and federal agencies is also very important, as you will need this kind of paperwork to prove that these monies were not income and are not taxable as such.
If your business has been affected by a natural disaster and you need advice on how to move forward, the professionals at Bloch Rothman and Associates will help you every step of the way. We are here to help make sure that your business recovers as quickly as possible and that you take advantage of all of the tax relief and benefits you are privileged to in your time of need.