Who is eligible for extended tax deadlines or other tax relief?
Most taxpayers impacted by natural disasters are eligible for tax relief, although the relief varies depending on the time of year and extent of the disaster. This includes individuals who live in an affected area. For businesses with a principal place of business in the affected area, the tax relief extends to any type of business owner (including sole proprietors, LLC members, partnership interests, and corporate entities), and to any shareholder in an S Corporation.
In general, the IRS extends tax filing due dates as well as due dates for paying taxes in disaster situations. If you were making payments on an IRS Installment Agreement and the IRS makes a disaster declaration for your area, the IRS offers a bit of a reprieve. Installment payments may be suspended until the end of the applicable postponement period.
What types of natural disasters qualify for tax relief?
The IRS issues notices after qualifying natural disasters occur. These notices provide new tax filing and payment deadlines and information about what states/counties are eligible for tax relief.
Current tax relief related to natural disasters includes the following:
Hawaii Wildfire Victims
Victims of the August 2023 Hawaii wildfires will receive extensions to file various individual and business tax returns and payments. The IRS has stated that victims of these wildfires have until February 15, 2024 to file and to pay their taxes. It is important to note that this only applies to filings and payments that were due on or after August 8, 2023 but before February 15, 2024.
Vermont Flooding Victims
Taxpayers that were impacted by the July 7, 2023 flooding in Vermont now have until November 15, 2023 to file tax returns and make tax payments. Impacted taxpayers will have until November 15, 2023 to file taxes and make tax payments that were due from July 7, 2023 to November 15, 2023.
Mississippi Storm Victims
Severe storms, straight-line winds and tornadoes hit Mississippi from June 14, 2023 to June 19, 2023. Taxpayers that were impacted have until October 16, 2023 to file individual and business tax returns and payments that were due between June 14, 2023 and October 16, 2023.
California Storm Victims
Victims of the winter 2023 California storms, flooding, and mudslides have extended tax deadlines. Specifically, anyone in an area designated as a disaster area by the Federal Emergency Management Agency (FEMA) has until October 16, 2023, to file and to pay their taxes. The new deadline extends to:
- Individual income tax returns normally due April 18, 2023.
- Business tax returns which would normally be due on March 15 and April 18.
- 2022 IRA contributions.
- 2022 Health Savings Account (HSA) contributions.
- Quarterly payroll/excise tax filings normally due January 31, 2023, and April 30,2023.
- Estimated quarterly tax payments normally due January 17, 2023, and April 18, 2023.
Alabama and Georgia Storm Victims
Tax relief is also available for victims of January 12, 2023, storms, straight-line winds, and tornadoes in Alabama and Georgia. Covered taxpayers in an affected area have until October 16, 2023, to make filings and payments which would otherwise have been due between January 12, 2023, and April 18, 2023. The new deadline applies to the same filings/payments identified above for California disaster victims.
What other types of disasters have been eligible for tax relief in the past?
Several other natural disasters also qualified for tax relief in 2022 and 2023. Now expired, relief was available for:
- Hurricane Nicole Victims.
- New York Storms in November and December 2022.
- Drought-stricken farmers and ranchers in 44 states.
- Severe storms and flooding in Alaska in September 2022.
- Puerto Rico victims of Hurricane Fiona.
- Mississippi water crisis victims.
- Victims of severe storms in Kentucky, Missouri, Tennessee, Oklahoma, Montana, Washington, and Colorado.
The IRS also extended deadlines for COVID penalty relief for calendar year 2019 and 2020 tax returns for people and businesses located in certain FEMA-declared disaster areas. These extended deadlines are also now expired.
The IRS maintains an up-to-date state-by-state list of disaster-related tax relief on its website.
Do I need to prove that I was impacted by a natural disaster?
In most cases, taxpayers do not need to apply for natural disaster tax relief. In fact, it is unlikely that you would need to contact the IRS about a tax extension at all. The tax relief is automatic for any individuals or business taxpayers located in a federally declared disaster area.
What if I live outside a disaster area? Can I still take advantage of the extension?
You may be eligible for extended tax deadlines even if you live outside the affected area, or your primary place of business is not located inside a covered disaster area. There are several ways you may qualify:
- You use a tax professional whose business is located in a disaster area, and your taxpayer is unable to file returns or make payments on your behalf because of the disaster.
- Your tax records are located in a disaster area.
- You are an S Corporation shareholder or own an interest in a partnership located in a covered disaster area, and the business is unable to provide you with the Schedule K-1 or other documentation you need to prepare your tax filings.
If any of these exceptions apply, remember that you are not automatically eligible for tax filing deadline extensions or other applicable relief. Talk to your tax professional or contact the IRS Disaster Hotline to explain the circumstances and be prepared to provide the FEMA Disaster Declaration Number.
I live in a qualified disaster area, but received a notice that my filing was late. What are my options?
While the IRS automatically extends tax relief to disaster victims who live in covered areas, mistakes do happen. If you receive a notice that your tax filing or payment was late, and the notice tells you that you now owe a payment penalty as a result, contact the number on the letter you received. In most cases, it is a fairly simple matter to have the IRS apply the extended due date and waive your penalties.
If you need tax help, Rocket Lawyer now offers tax services with Rocket Tax™. Don't do your taxes™ – Let us do them for you. If you have more questions about taxes and tax extensions, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.