June 14, 2019

Taxes: Tips for Safeguarding Your Tax Information in the Event of a Natural Disaster

Natural Disaster and Taxes.

Both can ... and do ... happen.  Well, and death, too, but that's another topic.

If a natural disaster were to strike your community, how safe would your tax information be?  For many people and business, the current answer is likely  "well, not very".

Let's change that!

Here are some tips from the IRS to help individuals and businesses safeguard their tax information in the event of a natural disaster.  Don't procrastinate, be prepared!

IRS Tax Reform Tax Tip 2019-67

Safeguarding Your Tax Information in the Event of a Natural Disaster

Floods, wildfires, hurricanes, tornados and other natural disasters happen quickly and often with little warning. No one can prevent these disasters from happening, but people can prepare for them.

Here are some things taxpayers can do to help protect their financial safety should a disaster occur. Taxpayers should:

Update emergency plans. A disaster can strike any time.  Personal and business situations are constantly evolving, so taxpayers should review their emergency plans annually.

Create electronic copies of documents. Taxpayers should keep documents in a safe place . This includes bank statements, tax returns and insurance policies.  This is especially easy now since many financial institutions provide statements and documents electronically. If original documents are available only on paper, taxpayers should scan them.  They should save them on a DVD or CD, or store them in the cloud.

Document valuables. It’s a good idea to photograph or videotape the contents of any home.  This is especially true when it comes to items of value. Documenting these items ahead of time makes it easier to claim insurance and tax benefits if a disaster strikes. The IRS has a disaster loss workbook. Using this can help taxpayers compile a room-by-room list of belongings.

In the case of a federally declared disaster, affected taxpayers can call the IRS at 866-562-5227.  The taxpayer can speak with an IRS specialist trained to handle disaster-related issues. Taxpayers can request copies of previously filed tax returns and attachments by filing Form 4506.  They can also order transcripts showing most line items through Get Transcript on IRS.gov.  They can also call 800-908-9946 for transcripts.

Know what tax relief is available in disaster situations. Taxpayers should be aware that the Tax Cuts and Jobs Act modified the itemized deduction for casualty and theft losses.  After Dec. 31, 2017, net personal casualty and theft losses are deductible only to the extent they’re attributable to a federally declared disaster.  Claims must include the FEMA code assigned to the disaster.

Additional IRS Resources:
Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
Publication 547, Casualties, Disasters, and Thefts
Publication 5307, Tax Reform: Basics for Individuals and Families (PDF)
Publication 583, Starting a Business and Keeping Records
National Weather Service website
Tax Concerns?
About Mary Rae Fouts, EA

Mary Rae Fouts, EA provides tax, insurance consulting, and expert witness services to clients throughout the United States.  For more information visit FoutsFinancialGroup.com.

Mary Rae Fouts

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