What Relief Is Available?
Specifically, the IRS is offering tax relief and payment extensions to individuals and businesses living or doing business in affected states. This includes:
- Quarterly payroll and excise tax returns.
- Quarterly estimated income tax payments.
- 2024 tax returns that would normally be due in March or April of 2025.
In all of these scenarios, the deadline to file returns and make payments will now be pushed to May 1, 2025. In addition to these extended payment deadlines, the IRS is also offering penalty relief for businesses that pay excise tax and payroll deposits. However, these relief periods can vary by state.
Who Is Eligible?
According to an IRS press release, “the IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.”
However, for taxpayers in these areas who may not have a current IRS address record, it may be necessary to reach out to the IRS directly.
As of October 1, 2024, individuals and businesses located in FEMA-disaster declaration localities are eligible for this tax relief. This includes those in the states of:
- Alabama
- Georgia
- North Carolina
- South Carolina
Those in some parts of Florida, Tennessee and Virginia may also be eligible.
For Those Who Receive a Penalty Notice in Error
Those who do not have updated IRS address records may receive a penalty notice from the IRS. If this happens, the taxpayer should immediately call the number on the notice to have the penalty waived. The same applies to those who may live outside the defined disaster area but whose records (including receipts and tax documents) may be located in the affected area.
Additional Tax Relief Opportunities
For individuals and businesses facing disaster-related losses as a result of Hurricane Helene, there are some additional opportunities for tax relief to be aware of. Specifically, taxpayers who experienced uninsured or unreimbursed damages from the hurricane are able to claim them on either their 2023 or 2024 tax returns.
Consider, too, that disaster relief payments are typically deducted from a taxpayer’s gross income. This generally includes payments for personal or family funeral expenses, home repairs and even total home replacement.
Finally, those looking to take an early distribution on a retirement plan to help pay for disaster-related losses should be aware of options available to them to minimize their taxes paid. Specifically, taxpayers can sometimes take special distributions from retirement plans without paying early distribution taxes and penalties if the income is spread over a certain period of time. Of course, each plan is different, so taxpayers should review their specific plan details to determine what their options are and if they may be eligible to take a hardship withdrawal.
Tips for Individuals and Business Owners Affected
Having to think about taxes after facing the devastation of a natural disaster is something no American should have to do, which is why the IRS is extending payment/filing deadlines and offering some relief for individuals and businesses in the most affected areas.
Still, for those who may be struggling to recover after the hurricane, there are additional resources to explore for help. Eligible taxpayers, for example, can get help with preparing their tax returns through the Volunteer Income Tax Assistance or Tax Counseling for the Elderly sites. Likewise, families or individuals with an adjusted gross income of $79,000 or less in 2023 are eligible to use the IRS Free File platform to prepare their returns at zero cost.
This can also be a good time to meet with an experienced tax advisor or financial advisor for further guidance. Navigating finances in the aftermath of a natural disaster is unfamiliar territory for many, but a knowledgeable professional can provide some much-needed guidance and reassurance during this difficult time.
Contact Frankel to learn more about how we can support you and your business at www.frankel.cpa or call us at (402) 469-9100.
