All Taxpayers Should Plan Ahead for Natural Disasters
Courtesy Internal Revenue Service
Floods, wildfires, hurricanes, tornadoes and other natural disasters happen quickly and often with little warning. No one can prevent these disasters from happening, but people can prepare for them.
Here are some things taxpayers can do to help protect their financial safety should a disaster occur. Taxpayers should:
Update emergency plans.
A disaster can strike any time. Personal and business situations are constantly evolving, so taxpayers should review their emergency plans annually.
Create electronic copies of documents.
Taxpayers should keep documents in a safe place. This includes bank statements, tax returns and insurance policies. This is especially easy now since many financial institutions provide statements and documents electronically. If original documents are available only on paper, taxpayers should scan them. They should save them on a DVD or CD, or store them in the cloud.
It’s a good idea to photograph or videotape the contents of any home. This is especially true when it comes to items of value. Documenting these items ahead of time makes it easier to claim insurance and tax benefits if a disaster strikes. The IRS has a disaster loss workbook. Using this can help taxpayers compile a room-by-room list of belongings.
Remember the IRS is ready to help.
In the case of a federally declared disaster, affected taxpayers can call the IRS at 866-562-5227. The taxpayer can speak with an IRS specialist trained to handle disaster-related issues. Taxpayers can request copies of previously filed tax returns and attachments by filing Form 4506. They can also order transcripts showing most line items through Get Transcript on IRS.gov. They can also call 800-908-9946 for transcripts.
Know what tax relief is available in disaster situations
Taxpayers should be aware that the Tax Cuts and Jobs Acts modified the itemized deduction for casualty and theft losses. After Dec. 31, 2017, net personal casualty and theft losses are deductible only to the extent they’re attributable to a federally declared disaster. Claims must include the FEMA code assigned to the disaster.
Tax Reform Tax Tip 2019-67