Tax changes connected to the historic number of storms this 2020 Atlantic hurricane season keep on coming.
This week the Internal Revenue Service announced that some Alabama individuals impacted by Hurricane Sally, which made official landfall near Gulf Shores, Alabama, on Sept. 16, now have until mid-January to deal with impending tax tasks.
Sally actually began affecting Gulf Coast states on Sept. 14. That's the day cited by the IRS in announcing that affected individuals have until Jan. 15, 2021, to file various individual and business tax returns and make tax payments.
So far, the deadline extension applies to residents in the Alabama counties of Baldwin, Escambia and Mobile.
Those are the areas that have been designated by the Federal Emergency Management Agency (FEMA) as qualifying for federal major disaster assistance. Any other areas subsequently added to the disaster list will automatically receive the same filing and payment relief.
The IRS also keeps track of these disaster-eligible areas on its own disaster relief page.
Extended tax actions: With the IRS announcement of Hurricane Sally relief starting on Sept. 14, that means individuals who missed the Sept. 15 estimated tax deadline don't have to worry. Affected Alabama taxpayers now can make those third quarter payments as late as next Jan. 15.
Theses filers should note that next Jan. 15 also is the due date for 2020's fourth quarter 1040-ES filings. So be prepared, like on July 15 when COVID-19 delayed estimated payments 1 and 2 were simultaneously due, to pay double.
In addition, individuals in the three (for now) Alabama disaster counties who earlier this year extended their 2019 tax return filings to Oct. 15 now have until Jan. 15, 2021, to get that annual tax return to the IRS.
However, the IRS reminds taxpayers that because the tax payments related to that 2019 return were due on July 15, those payments are not eligible for this relief. If you didn't pay in mid-July, then late payment penalties and interest have and will continue to accrue.
Tax-exempt organizations operating on a calendar-year basis that had a valid extension to file by Nov. 16 also now have until the mid-January 2021 deadline to file.
The new Jan. 15 deadline also applies to businesses with extensions, such as calendar-year corporations whose 2019 extensions run out on Oct. 15.
In addition, businesses' quarterly payroll and excise tax returns normally due on Nov. 2 now can be postponed until the new January 2021 due date. As for payroll and excise tax deposits that were due on or after Sept. 14 and before Sept. 28, the IRS says penalties on those amounts will be abated as long as the deposits are made by Sept. 29.
Affected Alabama tax-exempt organizations that operate on a calendar-year basis and that had a valid extension due to run out on Nov. 16 also now have until the Jan. 15, 2021, due date. So do calendar-year corporations whose 2019 extensions run out on Oct. 15.
No special action needed: As with other major disaster situations, Sally-affected Alabama taxpayers don't need to take special steps to get this tax relief.
(National Weather Service, Mobile Office via Wikipedia Commons)
Filing and penalty relief is automatic for anyone with an IRS address of record located in the disaster area. If, however, an affected taxpayer receives a late filing or late payment penalty notice from the IRS regarding an action falling within the disaster postponement period, they should call the number on the notice to have the penalty abated.
The IRS also will work with taxpayers who don't live in the official disaster areas, but whose records necessary to meet a deadline during the postponement period are located in the affected area. In these cases, call the IRS at (866) 562-5227.
And the IRS also is aware that many people head to disaster areas to help, meaning that their own tax responsibilities are put on hold. Any workers assisting Hurricane Sally relief efforts in the designated FEMA disaster counties as part of a recognized government or philanthropic organization get the same tax relief as those directly affected by the storm.
Major disaster relief updates, assistance: I know you're tired of reading this, but a wild 2020 hurricane season keeps making me retype it.
If you're in an area that FEMA designates as a major disaster, you might be able to claim your uninsured disaster losses on your taxes. You also get the option to claim them on either the return for the actual tax year the loss occurred or the prior tax year. This means you get to pick the filing that will create a better tax result for you.
For taxpayers affected by Hurricane Sally and other recent major disasters, that means you could wait and claim your losses on your 2020 return you'll file in 2021 if that will give you a smaller tax liability or a bigger refund. On the other hand, if you find you would get more tax relief by claiming the losses on your 2019 taxes, you could do that.
If you got an extension to file your 2019 return, you've got until Jan. 15 to include your Alabama hurricane damage claims on that return. If you already filed but want to use this year's hurricane losses against 2019 taxes, you'll need to file an amended return, which you now can do electronically.
Regardless of when you do claim any losses from a major disaster, be sure to write the appropriate FEMA declaration number on your tax return. For Hurricane Sally tax claims by Alabama filers, that's #4563.
Other disaster help avenues: IRS Publication 547 has more details on making disaster loss claims. You also can find disaster tax tips, ranging from preparation steps to recovery options to how to help those in need, in the ol' blog's special Storm Warnings pages.
The hubby and I went through several hurricanes and tropical storms when we lived in Florida, so we know that taxes are the last thing anyone in Alabama — or Oregon or California or Louisiana or Iowa or all the other places where Mother Nature has become Mommy Dearest this year (plus COVID-19; enough already 2020!) — is thinking about as they deal with a disaster's staggering reality.
But when the time comes, and it will, and you do need and qualify for any tax or government help after a disaster, take it.
Most importantly, stay safe. Your well-being always comes before taxes.
You might find these items of interest:
- File major disaster claims on Form 4684
- A pre-disaster inventory can pay off when filing insurance or tax claims
- IRS and other government resources can help you deal with a natural disaster