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:
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.
New York Storm Victims – December 23, 2022
A December 23, 2022, winter storm in New York brought snow, ice, and devastation to the area. In response, some tax relief for taxpayers in the area was announced. Tax filings and payments due between December 23, 2022, and before April 18, 2023, were extended to April 18, 2023. People who live in, or whose businesses are located in, affected counties in New York can take advantage of the April 18, 2023, extension for the following original deadlines:
- Quarterly estimated tax payments due January 17, 2023.
- Quarterly payroll and excise tax returns due January 31, 2022.
- Penalties are waived for payroll and excise tax payments due on or after December 23, 2022, and before January 9, 2023, as long as tax payments were made by January 9, 2023.
New York Storm Victims – November 18, 2022
For taxpayers in New York state impacted by an earlier severe winter storm on November 18, 2022, the IRS offered an extension of time until March 15, 2023, for certain tax filings (both individual and business filings) as well as income tax payments. This includes:
- Quarterly estimated tax payments due January 17, 2023.
- Quarterly payroll tax withholding and excise tax returns due January 31, 2023.
- As long as payroll/excise tax deposits were made by December 5, 2022, late filing penalties which would have otherwise applied for payments due between November 18, 2022, and December 5, 2022, are waived.
Hurricane Nicole Victims
Hurricane Nicole, which began impacting Florida residents and business owners on November 7, 2022, caused significant damage and catastrophic losses. The IRS provided tax relief for affected individuals and business owners, extending certain tax deadlines until March 15, 2023. Tax relief for this disaster is similar in most respects to the relief outlined above for November 18, 2022, New York winter storm victims.
In addition, Florida taxpayers who received valid extensions of time to file their prior year 2021 tax returns by October 17, 2022, had that October deadline automatically extended to February 15, 2023, due to Hurricane Ian disaster relief. Disaster relief for Hurricane Nicole further postponed that deadline to March 15, 2023. However, as is the case any time the IRS grants an extension of time to file a return, it does not mean you have an extension of time to pay any taxes due. So, if you owed taxes for the 2021 tax year, those payments were due April 18, 2022.
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. Now expired, relief was available for:
- Victims of Hurricane Ian in certain counties of Florida, North Carolina, and South Carolina.
- Severe flooding in Illinois in July 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.
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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.