NEW YORK — If your life has been upended by a wildfire, hurricane, flood, tornado or another disaster this past year, the IRS recognizes that you may need more time to file your taxes and grants you an automatic extension beyond the normal filing deadline.
You’re also permitted to write off a certain amount of loss due to disaster, reducing your tax burden. That could be damaged property, lost income or small business losses.
“It can feel really daunting and overwhelming, after you’ve already lost your home or your vehicle, to tackle that project (of loss write-off). It can take time and a lot of energy,” said Alison Flores, manager at the Tax Institute for H&R Block.
In the wake of a disaster, people are also more vulnerable to scams, so be extra vigilant as you prepare your taxes, even with the extra time of an IRS extension.
“Scammers often pose as representatives of the IRS or FEMA to exploit victims of disasters,” said Misty Erickson, tax content program manager at the National Association of Tax Professionals. “Common scams include false promises of tax refunds, fake charities soliciting donations and phishing attempts requesting personal or financial information.”
Here’s what you should know.
Determine if your area is a disaster site
The IRS keeps an official list online of all disaster locations that qualify you for an extension to file.
For the past year, individuals and businesses affected by Hurricanes Helene and Milton qualify for tax relief, as well as disaster victims in parts of Alabama, Florida, Georgia, North Carolina, South Carolina, New Mexico, Tennessee, Virginia, West Virginia and Alaska.
Taxpayers in these areas have until May 1 to file returns and make payments, and there’s no need to do any additional paperwork to receive that extra two-week grace period. Filers also have the option to request additional extensions to Oct. 15, but interest will accrue if any money due isn’t paid by May 1.
Individuals and businesses in southern California affected by wildfires and straight-line winds also qualify for automatic extensions due to disaster. Taxpayers in the relevant counties have until Oct. 15 to file returns and make payments.
Any interest or fees that typically accrue on late payments won’t be incurred during disaster extensions. Most direct disaster relief is also not counted as income and is not taxed.
While nothing is easy in the first days and weeks following a disaster, a few choices can help when seeking insurance reimbursement and at tax time.
“We recommend saving media coverage,” said Flores. “If your neighborhood was on the news showing the disaster, write down what date that was or record that copy. “
According to the IRS, other steps include:
• Taking photographs of damaged property or belongings to document and calculate the amount of your loss.
• Keeping receipts for associated expenses, including contracted work on property damaged by disaster.
• Keeping records of the original value of any property, including a home, car, jewelry or big credit card purchases.
Filing your insurance claims as soon as possible is also important, as you deduct any insurance reimbursement from disaster losses claimed on your tax return.
Determine if you qualify for tax deductions
“When we look at a loss, it’s often damage to your home, furnishings inside your home, vehicles, that kind of thing,” Flores said.
The IRS calls this kind of disaster relief “casualty loss.” Claiming casualty loss doesn’t result in dollar-for-dollar reimbursement, but it does lower your tax burden.
Form 4684, which you include when you file your return, walks you through the relevant steps for calculating your casualty write-off.
Victims of disasters may deduct their losses in either the year they suffered the loss or the previous year — in that case, by filing an amended return.
Watch out for scams
In the wake of a disaster, it’s normal to feel vulnerable and to listen to voices that promise relief. But scammers often target disaster victims for exactly this reason.
“Taxpayers should be cautious of unsolicited phone calls, emails or texts claiming to be from the IRS or relief agencies,” said Erickson.
According to the IRS, you should watch out for:
• Big paydays: The promise of more money than you think sounds reasonable. Bad advisers may make outlandish statements about available credits.
• Threats and demands: Any pressure to pay for tax help “now or else,” mentions of arrest or deportation, or refusals to let you question or appeal the taxes they say you owe.
• Suspicious or misspelled website links that aren’t irs.gov.
