As Hurricane Florence continues to ravage the mid-Atlantic region, having dumped record amounts of rainfall in the Carolinas over the weekend, millions of people have found themselves affected by evacuations, flooding, power outages, and other catastrophic damage. While the waters may not recede for days or weeks, those touched by the massive storm are already attempting to put their lives back together.
In light of the disaster wrought by Florence, the IRS has made tax relief available to the storm’s victims. There are two main types of relief: the ability to deduct disaster-related casualty losses – the loss or damage of property – and the extension of several important tax deadlines. The relief applies to taxpayers in federally declared disaster areas. This declaration must be made by the president for casualty losses in an area to be eligible for a tax deduction.
Extensions
Individuals and businesses whose taxes were due during the period of deadlines that started September 7, 2018 will now have until January 31, 2019 to pay their taxes. This includes:
- Returns due October 15 because of a valid extension
- Quarterly estimated income tax payments due September 17
- Calendar-year business partnerships whose extensions expire September 17
- Quarterly payroll and excise returns due September 30
Additionally, penalties on payroll and excise tax deposits due on or after September 7 and before September 24 will be forgiven as long as the deposits are made by September 24.
Deductions
If you’ve suffered the loss or damage of your property because of Hurricane Florence – and you live in a federally declared disaster area – you may be able to deduct these casualty losses. You must subtract $100 per loss event (for example, Hawaii had three in a row: a volcano, an earthquake, and a hurricane; anyone who suffered a loss in more than one of these would subtract $100 from each) and 10% of your Adjusted Gross Income from the value of all losses combined. The IRS allows you the option to claim the casualty loss on your tax return for the year the disaster occurred (in this case, it would be your 2018 return, due by April 15, 2019) or on your 2017 tax return – whichever one is better for you. That could mean an earlier refund, but a potentially better result if you’re applying the casualty claim to the later tax return.
Affected Areas
As of right now, these tax relief measures apply only to the following counties in North Carolina:
- Beaufort
- Brunswick
- Carteret
- Craven
- New Hanover
- Onslow
- Pamlico
- Pender
However, this list is likely to grow in the coming days. We will update it accordingly.
Once your family and home are safe and secure, it may be time for you to start thinking about your tax circumstances if you’ve been affected by Florence. If you have any questions or concerns, talk to a Tax Pro. They can help you navigate this tough situation and make sure you’re getting the most from your tax return.
From all of us here at Jackson Hewitt, stay safe.