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IRS grants tax relief to Texans hard hit by Hurricane Harvey

People are still being rescued in flooded Houston, so very few — even those who made it through Hurricane Harvey relatively unscathed — are thinking about taxes right now. But when they do begin to face rebuilding their post-storm lives, one of the things they'll have to deal with is taxes.

Texas National Guard soldiers rescue efforts_1Lt Zachary West_100th MPAD_via Flickr
A Texas National Guard soldier rescues a woman from her Hurricane Harvey flooded Houston neighborhood. (Photo by 1Lt. Zachary West, 100th MPAD, via Flickr Creative Commons)

The Internal Revenue Service has some good news for folks in Houston and its flooded surroundings, as well as those in other areas of Texas that sustained severe damage due to the hurricane.

These folks have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments. That new filing deadline is the latest By the Numbers figure.

18 47 Texas counties, so far: The taxpayers, both business and individual, to whom the Jan. 31 extension applies live or own companies in Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria and Wharton counties.

UPDATE, Oct. 12: The number of Texas counties listed by FEMA as major disaster areas and which now get IRS tax relief has grown to 53. They are Aransas, Austin, Bastrop, Bee, Bexar, Brazoria, Burleson, Caldwell, Calhoun, Chambers, Colorado, Comal, Dallas, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Hardin, Harris, Jackson, Jasper, Jefferson, Jim Wells, Karnes, Kleberg, Lavaca, Lee, Liberty, Guadalupe, Madison, Matagorda, Milam, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Augustine, San Jacinto, San Patricio, Tarrant, Travis, Tyler, Victoria, Walker, Waller, Washington and Wharton.

The IRS also notes that the extension includes tax-exempt organizations with an original or extended filing deadline falling within the postponement period. 

More Texas counties — and possibly some in Louisiana as Harvey now heads to that neighboring state — could be added to this special tax relief list as the Federal Emergency Management Agency (FEMA) continues its damage assessments in the storm area.

"This has been a devastating storm, and the IRS will move quickly to provide tax relief to hurricane victims," said IRS Commissioner John Koskinen in announcing the special tax relief.

Special individual tax relief: The IRS' extended deadline means affected individual taxpayers who last spring got an extension until Oct. 16 to file their 2016 federal tax returns now have five more months to complete that paperwork task.

The IRS notes, however, that because any due tax payments related to 2016 returns were originally due on April 18, those payments are not eligible for this relief. If you didn't pay what you owed when you got our extensions, the penalties and interest associated with that under- or nonpayment is still adding up.

The same Jan. 31 extension applies to businesses that got filing extensions that are coming up in mid-September.

The extra filing time also covers the last two 2017 estimated tax payments that are due Sept. 15 and Jan. 16, 2018.

Business tax relief, too: In addition, the Hurricane Harvey tax relief postpones various business tax filing and payment deadlines that occurred starting on Aug. 23, when Harvey made landfall on the Texas Gulf Coast.

This includes the Oct. 31 deadline for quarterly payroll and excise tax returns.

The IRS also is waiving late-deposit penalties for federal payroll and excise tax deposits normally due on or after Aug. 23 and before Sept. 7, if the deposits are made by Sept. 7, 2017.

Automatic relief: Almost as good as the tax relief itself is that the IRS is making it easy for eligible filers to receive it.

The IRS automatically provides filing and penalty relief to any taxpayer whose address of record with the tax agency is in the disaster area. That means affected taxpayers don't need to contact the IRS to get this relief.

If, however, you are eligible for the special Hurricane Harvey relief and erroneously get an IRS late filing or late payment penalty notice, call the number on the notice to have the penalty abated.

The IRS says it also will work with taxpayers who live outside the disaster area, but whose records necessary to meet a deadline covered under the postponement period are located in the affected area.

Taxpayers who qualify for relief but who live outside the disaster area need to contact the IRS toll-free at 866-562-5227.

Such out-of-area taxpayers include relief and recovery workers who are part of a recognized government or philanthropic organization. This means folks who are, for example, official American Red Cross volunteers, but not individuals who simply went to a disaster area on their own to help.

More Harvey help: Remember, in addition to the extra filing time the IRS has granted Hurricane Harvey victims, individuals and businesses who suffered uninsured or unreimbursed disaster-related losses have a choice as to when to claim those losses.

In the cases of major, officially declared disasters, you can choose to claim the losses as an itemized deduction on the tax return for the year the disaster occurred, which in this case would be the 2017 filing submitted next year, or on the prior year's tax return, which in this case is the 2016 return.

In most cases, choosing the prior year claim route means amending that earlier Form 1040. But if you got an extension to file your 2016 tax forms — which now aren't due until Jan. 31, 2018 — that means you can claim Harvey's 2017 losses on your 2016 return when you do finally file the forms.

More disaster info: IRS Publication 547 has more on claiming casualty losses, as does this Tax Tip with specifics on disaster loss claims.

You also can find details on available storm-related tax matters on the IRS' disaster relief Web page.

FEMA has a special Web page with, among other info, Hurricane Harvey emergency telephone numbers.

DisasterAssistance.gov has information on disaster recovery.

USA.gov has an overview of government-wide efforts related to Hurricane Harvey.

And my Storm Warnings collection has links to posts on preparing for, recovering from and helping those dealing with major natural disasters.

You also might find these items of interest:

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Comments

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Kay Bell

I don't think it misses the mark. Rather, this post is primarily focused on what was the October (and some other) filing dates that were going to be impossible for Houstonians and other affected Texans to meet.

The fact that folks can file their 2017 disaster claims on those returns due in 2018 (and, as you note, as late as that October filing extension deadline next year) is mentioned in the post, along with links readers can follow for that process if they opt to do so instead of claiming on 2016 returns (either filed on extension or amended).

timo.cpa.tx@gmail.com

This really misses the mark. Not only do taxpayers have more time to file their 2016 tax return, they have until October 15, 2018 to make a 165(i) election to claim their HARVEY disaster/casualty loss on their amended 2016 tax return, which will yield a significant Federal Tax Refund for very many taxpayers.

AID4HARVEY.com has details.

Rhonda

If you are disabled and on Social Security and low income where can you get extra help?

cbriancpa

Do you think they'll be expanding the locations. I'd like to see them give some extra time to the surrounding areas so we can focus on family and friends who were affected.

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