September is National Preparedness Month
With the peak of hurricane season arriving, an elevated wildfire risk across much of the West, and numerous other natural disasters that are always a risk, all citizens are urged to develop an emergency preparedness plan. If you already have one, you should take time now to update it for 2024.
You can begin getting ready for a disaster with a preparedness plan that includes protecting and duplicating essential documents, creating lists of property, and knowing where to find information if needed.
In the aftermath of a disaster, having updated documents and other information readily available can help victims apply for the relief available from the IRS and other agencies. Disaster assistance and emergency relief may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area.
Protect key documents; make copies
You should keep critical original documents inside water and fireproof containers in a safe place. These include tax returns, birth certificates, social security cards, deeds, titles, insurance policies, and other important items.
In addition, consider having a relative, friend or other trusted person keep duplicate copies of these documents at a location away from a potentially impacted disaster area.
If original documents are on paper, they should be scanned or photographed into a digital file format and stored in a secure digital location. This can provide added security and portability.
Document valuables
Maintain a detailed inventory of the contents in your property and business. You can take photos or videos to record your possessions, and you should also write down descriptions that include year, make, and model numbers where appropriate.
The IRS provides disaster loss workbooks that can help you compile lists of your personal and business belongings and business equipment. After a disaster hits, this kind of documentation can help support claims for insurance or tax benefits. You can find the personal-use workbook here, and the business workbook here.
Reconstructing records
Reconstructing records after a disaster may be required for tax purposes, getting federal assistance, or insurance reimbursement. Most financial institutions can provide statements and documents electronically, an option that can aid the reconstruction process.
Employers should check fiduciary bonds, verify online tax accounts
Employers using payroll service providers should check if their provider has a fiduciary bond in place to protect the employer against a possible provider default.
Most employers already use the Electronic Federal Tax Payment System (EFTPS) and their state’s online Department of Revenue system to make their tax deposits and business tax payments. Be sure to keep your login information handy, should a disaster displace your business and employees. You can also make EFTPS tax payments over the phone, and this option may also be available for your state.
IRS Disaster Relief
Following a federal disaster declaration, the IRS may postpone various tax filing and tax payment deadlines or provide other relief. The IRS identifies taxpayers located in the covered disaster area and automatically applies filing and payment relief. This means taxpayers whose IRS address of record is in the disaster area don’t need to contact the IRS to get disaster tax relief.
Many taxpayers living outside the disaster area may also qualify for relief. This includes those assisting with disaster relief and taxpayers whose records necessary to meet a filing or payment deadline postponed during the relief period are located in the disaster area. Eligible individuals and businesses located outside the disaster area can request relief by calling the IRS disaster hotline.
In addition, a special rule allows both individuals and businesses to choose to deduct uninsured or unreimbursed disaster losses on either the tax return for the year the disaster occurred or the return for the previous year.
