By Cora Lewis
NEW YORK (AP) – If your life has been bailed out for the past year by a wildfire, hurricane, flood, tornado, or another disaster, the IRS recognizes that it may take more time to file your taxes and grants an automatic extension beyond the normal filing deadline.
It is also permitted to amortize certain amounts of losses caused by disasters, reducing tax burden. It could be damaged property, lost income, or loss of small business.
“We’ve seen a lot of experience in the future,” said Alison Flores, manager of the H&R Block’s Tax Research Institute. “We see people hesitate to work on it, so they leave that loss on the table.”
People are also vulnerable to fraud in the wake of disasters, so even if you have extra time to extend the IRS, be especially vigilant when preparing your taxes.
“Crazy people often pose as representatives of the IRS or FEMA to exploit casualties,” says Misty Erickson, Tax Content Program Manager for the National Association of Tax Professionals. “Public scams include false promises to refund taxes, false charities seeking donations, and attempts to phish theft to request personal or financial information.”
Here’s what you need to know:
First, determine if your area is a federally declared disaster site
The IRS keeps an official list of all disaster locations that are eligible for file extensions online.
Individuals and businesses affected by Hurricane Helen and Milton over the past year are eligible for tax credits and are disaster victims in parts of Alabama, Florida, Georgia, North Carolina, South Carolina, New Mexico, Tennessee, Virginia, West Virginia and Alaska.
Taxpayers in these areas must submit returns and make payments by May 1st, and do not need to make additional documents to receive that two-week grace period. Filers also have the option to request additional extensions until October 15th, but you will be charged interest if you are not paid by May 1st.
Individuals and businesses in Southern California are affected by wildfires and linear winds, and are also eligible for automatic expansion due to disasters. Taxpayers in related counties must submit returns and make payments until October 15th.
During a disaster extension, you will not incur any interest or charges that normally arise from your regular payments. Most direct disaster relief is not taxed as it does not count as income.
Remember that simple steps in the direct aftermath can make a difference
There’s nothing easy in the first few days and weeks after a disaster, but a few options can help when seeking an insurance refund or at the time of tax.
“I recommend saving media coverage,” Flores said. “If your neighborhood was featured in news of a disaster, write down the date on which you will record a copy of it or the date on the record. It will help you with what proof of your losses and what condition your property is.”
According to the IRS, other steps include:
– Take a photo of your damaged property or belongings and document and calculate the amount of loss.
– Maintain receipts for related expenses, including contract work on property damaged by the disaster.
– Keep a record of the original value of any property, including home, car, jewellery, or large credit card purchases.
It is also important to file your insurance claim as soon as possible. This is to deduct insurance refunds from disaster losses claimed on your tax return.
Next, determine if you qualify for a tax deduction
“When we see loss, it’s often the damage to your home, the furniture, the vehicles inside your home, that’s what it is,” Flores said. “Most of the time, people get home and car insurance and file claims. That’s the first step. Tax credits are losses that are not paid or refunded to the insurance.”
The IRS calls this type of disaster relief “loss of victims.” Claiming the casualty’s loss will not result in a refund of the dollar for the dollar, but it can reduce the tax burden.
Form 4684 explains the relevant steps to calculate the depreciation of a victim, including when you submit a return.
Disaster victims may deduct losses in the year or previous year in which they suffered the loss. In that case, by submitting an amended return.
Beware of fraud
It is normal to feel vulnerable and listen to the voices that promise relief after a disaster. However, fraudsters often target disaster victims for this reason.
“Taxpayers should be aware of unsolicited calls, emails or texts that they claim to be from the IRS or relief agency,” Erickson said. “The IRS will not request sensitive information by initiating contact via email, text or social media. If in doubt, the taxpayer must verify the communication by calling the official number directly.”
According to the IRS, you should be aware of the following:
– Large salary: More money promises sound reasonable than you think. A bad advisor may make an outpatient statement about the available credits.
– Threats and Requests: The pressure to pay tax assistance “now or otherwise” refuses to question or appeal the tax you call or say.
– Suspicious or spelling website links not IRs.gov.
A scammer may say you want to “help” you in submitting a victim’s claim or receiving a major refund. Always rely on the official IRS government website and provide support like a fish on high prices or sensational promises.
The Associated Press is supported by the Charles Schwab Foundation for education and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Original issue: April 14, 2025, 1:31pm EDT
