July 12, 2024

Tax Troubles Eased: IRS Extends Helping Hand to Hurricane Idalia Victims

Floodwaters covered Horseshoe Beach in Florida's Big Bend area Wednesday after Hurricane Idalia passed through. Image Credits(Tampa Bay Times/Zuma Press)

The IRS has thrown a lifeline to individuals and businesses grappling with the aftermath of Hurricane Idalia in parts of Florida. Here’s what you need to know:

Extended Payment Deadline and Who Qualifies

In a recent announcement, the IRS has offered a helping hand to individuals and businesses in parts of Florida impacted by Hurricane Idalia, allowing them to defer tax payments until February 15, 2024. This extended deadline specifically applies to “individuals who had a valid extension to file their 2022 return due to run out on Oct. 16, 2023.”

But that’s not all – the relief also encompasses “Quarterly estimated income tax payments normally due on Sept. 15, 2023, and Jan. 16, 2024; quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, 2024; and calendar-year partnerships and S corporations whose 2022 extensions run out on Sept. 15, 2023.”

Hurricane Idalia’s Impact

Hurricane Idalia, making landfall as a Category 3 storm on August 30, wreaked havoc along Florida’s Big Bend region. Despite initially intensifying to a Category 4 with winds at 125 miles per hour, it was later downgraded to a Category 1 storm, still causing significant damage.

With more than 263,000 people left without electricity due to gusty winds and heavy rain, the storm claimed at least three lives, including two in rain-related traffic incidents and one in Georgia during a tree removal attempt as the storm headed northward.

According to property analytics firm CoreLogic, over 800,000 homes along Florida’s Gulf Coast face potential storm damage, with estimated losses totaling around $238 billion, covering materials, equipment, and labor, though not including land value.

While gas prices may experience a temporary spike in the affected area, similar to the aftermath of Hurricane Katrina in 2005, the rest of the country should remain unaffected, as most mega-refineries are not in the storm’s path.

Eligibility and Penalty Relief

Additional relief measures include calendar-year corporations and tax-exempt organizations eligible for the extension. 

“In addition, penalties for the failure to make payroll and excise tax deposits due on or after Aug. 27, 2023, and before Sept. 11, 2023, will be abated as long as the deposits are made by Sept. 11, 2023,” the agency said.

As per IRS records, taxpayers in the disaster area will receive filing and penalty relief automatically without contacting the agency. However, those with addresses outside the disaster zone may receive late filing or payment penalty notices and should get the provided number for penalty abatement.

“Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.”

Claiming Losses

Taxpayers with uninsured or unreimbursed disaster-related losses can claim them on their 2023 or 2022 returns.

The IRS stated, “Taxpayers have extra time—up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file)—to make the election. Be sure to write the FEMA declaration number, DR-3596-EM, on any return claiming a loss.”

Moreover, qualified disaster relief payments are excluded from gross income, permitting deductions for personal, family, living, or funeral expenses and repair or rehabilitation of homes and contents received from a government agency.

Lastly, the IRS extends additional disaster relief to those participating in retirement plans or individual retirement accounts (IRAs).

“For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years,” the agency said.

“Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.”

Remember to stay informed and take advantage of these relief measures if you’ve been affected by Hurricane Idalia. Financial well-being is essential; the IRS is here to help you during these challenging times.

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