Dec. 15 is new tax deadline for Iowa derecho, California wildfire victims
Tuesday, August 25, 2020
UPDATED Oct. 6, 2020: More Iowa counties now eligible for relief. Details below.
Mother Nature is in one foul, destructive mood.
California wildfires have killed seven people, destroyed more than 1,400 buildings destroyed and ravaged 1.25 million acres in the Golden State. Blazes also have burned more than 1.8 million acres in 14 states, according to the National Interagency Fire Center.
Hurricane Laura, which is shown in a National Hurricane Center satellite image below (updated 10 a.m. CDT, Wednesday, Aug. 26, 2020) gaining strength in the Gulf of Mexico, is expected to swamp East Texas and much of Louisiana, which also was the target of Tropical Storm Cristobal earlier this year, when it makes landfall.
Meteorologists now warn that Laura's arrival, expected late Wednesday, Aug. 26, or early Thursday, Aug. 27, could hit the coast as a category 4 storm.
And if she follows the predicted hard right turn, much of the middle of the country all the way to the MidAtlantic also will be soaked.
That downpour possibility is not good news for folks in Iowa. Hawkeye State residents are still trying to recover from the loss of personal property and livelihoods when a derecho slammed that region Aug. 10
Storm prep and help: If you're in a threatened area, prepare now. If you've sustained damage from a disaster, look into potential recovery help.
You can find ways to get ready or reassemble your life in the posts collected in the ol' blog's special Storm Warnings pages.
Some of that relief could come from the federal government.
In cases where a major presidential disaster is declared, Uncle Sam provides assistance via Federal Emergency Management Agency (FEMA) and other government programs.
Tax help, too: The Internal Revenue Service also steps up to offer some tax relief.
In the immediate wake of storm damage, the agency typically offers affected taxpayers some leniency in meeting tax obligations that are disrupted by disasters.
Taxpayers also have the option to claim related expenses — and do so for either the year of the damage or amend a previous one, whichever provides the best tax advantage — as itemized casualty losses on Schedule A. This option, thanks to changes under the Tax Cuts and Jobs Act (TCJA) of 2017, now is limited to major disaster losses.
Major Disaster Loss Tax Time Shifting
Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred or the prior tax year.
In the instance of major disasters in 2020, that would be on this tax year's return normally filed in 2021, or by including the loss on your 2019 return if you've not yet filed it. If you have filed your 2019 taxes and want to claim the loss because that will get you a refund or a bigger one, you can amend that return, electronically now.
Whenever you do claim your major disaster losses on your tax return, be sure to write the appropriate FEMA declaration number on your tax return. For the Iowa derecho, that's 4557. For California wildfire claims, it is 4558. IRS Publication 547 has more details.
While it will be a while before we hear from the IRS about any Hurricane Laura tax relief, the tax agency has announced tax help for California and Iowa filers who sustained disaster losses.
December derecho dates: Victims of the Aug. 10 derecho storm that affected parts of Iowa now have until Dec. 15 to file various individual and business tax returns and make tax payments.
The IRS uses the major disaster areas designated by FEMA. The IRS also keeps track of these disaster-eligible areas on its own disaster relief page.
In the Iowa derecho case this is, so far, Linn County. However, notes the IRS, any localities that FEMA adds to the disaster area will automatically receive the same filing and payment relief. That relief is postponement of various tax filing and payment deadlines that occurred starting on Aug. 10, the day of the destructive storm.
Update, Tuesday, Oct. 6, 2020: Today the IRS added Clinton County to the Iowa areas eligible for derecho tax relief. The full list now comes to 12 and includes Benton, Boone, Cedar, Clinton, Jasper, Linn, Marshall, Polk, Poweshiek, Scott, Story, and Tama counties.
Update, Thursday, Sept. 3, 2020: The IRS has added 10 more Iowa counties that are eligible for derecho tax relief. Joining Linn are Benton, Boone, Cedar, Jasper, Marshall, Polk, Poweshiek, Scott, Story and Tama counties.
Affected Iowa individual and business taxpayers now have until Dec. 15 to file returns and pay any taxes that were originally due during this period.
This date delay means that folks who got an extension to Oct. 15 to file their 2019 tax returns now have until mid-December to finish those 1040 forms.
The IRS notes, however, that because tax payments related to these 2019 returns were due on July 15, there is no payment relief. And due tax should have been paid with the extension request. If the full amount wasn't made then, existing penalties and interest still accrue even though the final form filing deadline has moved.
The Dec. 15 deadline also applies to quarterly estimated income tax payments that are due on Sept. 15.
As for affected Hawkeye State businesses, quarterly payroll and excise tax returns normally due on Oct. 31 now are postponed until Dec. 15. Businesses with extensions also have the additional time including, among others, calendar-year corporations whose 2019 extensions run out on Oct. 15.
That new December deadline also applies to Iowa tax-exempt organizations that operate on a calendar-year basis and which had a valid extension due to run out on Nov. 15.
California fire relief: Mid-December also is the new tax timeline for certain California taxpayers who sustained damages from the wildfires that erupted on Aug. 14.
Per the FEMA disaster designation for Golden State fires, individuals and businesses in Lake, Monterey, Napa, San Mateo, Santa Cruz, Solano, Sonoma and Yolo counties qualify for the relief. Any taxpayers in localities later added to the disaster area will automatically receive the same filing and payment relief.
As in the derecho decision, fire-affected Golden State business and individual taxpayers now have until Dec. 16 to meet tax filing and payment deadlines that occurred starting on Aug. 14.
Again, this Dec. 15 due date applies to those who got filing extensions, which were set for Oct. 15, as well as to the Sept. 15 estimated tax deadline. And again, this is even more time to file, not to pay any due tax that wasn't paid when the original extension requires was filed.
California businesses' quarterly payroll and excise tax returns normally due on Oct. 31 now are extended to Dec. 15. The state's tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on Nov. 15 also get the additional month to file.
No added tax action needed: If you're an Iowa or California taxpayer, individual or business, who qualifies for the disaster related relief, you don't need to do anything.
In major disaster situations, the IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area.
However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.
Out-of-area relief considerations: In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area.
It that's you, you need to contact the IRS toll-free at (866) 562-5227.
And the tax relief also extends to individuals who are in the area assisting with relief activities conducted by a recognized government or philanthropic organization.
If you need this tax and other government assistance, take it.
If you're in a potential national disaster area, which is anywhere in the United States and any time of the year, make the preparations appropriate for area's possible whack by mean Mother Nature.
Most importantly, stay safe. You and your family's safety is paramount. Things can be replaced. If they are physically lost, the memories will remain. Make sure you're still around to reminisce.
You might find these items of interest:
- File major disaster claims on Form 4684
- Reconstructing tax and other records after a natural disaster
- IRS and other government resources can help you deal with a natural disaster
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