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Californians dealing with latest round of wildfires get federal tax relief, new Jan. 15, 2021 due date

Wildfire at night_chenjack via flickr cc april 2008
Wildfire at night by Chenjack via Flickr

While millions of taxpayers rushed to finish their 2109 tax filing last week in order to meet the Oct. 15 extended deadline, others weren't concerned about that deadline.

They are the individual and business taxpayers who are dealing with something more pressing than taxes. They are trying to pick up the pieces from a major natural disaster.

In these catastrophic cases, the Internal Revenue Service usually gives affected taxpayers more time to take care of their tax filing tasks. Some additional West Coast taxpayers have been added to this year's adjusted tax deadline list.

Californians in seven counties ravaged by wildfires now have until Jan. 15, 2021, to file various individual and business tax returns and make tax payments

New round of fires, new tax relief: The affected California counties, as designated by the Federal Emergency Management Agency (FEMA), are Fresno, Los Angeles, Madera, Mendocino, San Bernardino, San Diego and Siskiyou.

California wildfires FEMA disaster declaration Oct 18 2020

These taxpayers, who've been dealing with fires that erupted on Sept. 4, now have until September 4 now have until January 15, 2021 to file their 2019 returns.

If any other jurisdictions are added to this latest major disaster list later, which the IRS also tracks on its special online disaster relief page, taxpayers in those locales also will receive the same tax relief.

Also note that this latest IRS tax relief move is separate from the tax-related wildfire relief the agency granted back in August for fires that broke out that month in other parts of the Golden State. These folks who were first to fight flames in 2020 have a Dec. 15 filing deadline.

Extended tax actions, again: Given the numbers of disasters that have raked the United States this year, regular readers probably have the guidelines for disaster related tax relief memorized. But just in case, here's the deal, specifically in connection with this series of California wildfires.

It applies to individual California filers who may have missed the Sept. 15 estimated tax deadline. These taxpayers now have until next Jan. 15 to make those third quarter estimated tax payments. If that's the case, these folks also need to be aware that the mid-January date also is the deadline for 2020's fourth quarter 1040-ES filings.

In addition, individuals in the disaster counties who earlier this year extended their 2019 tax return filing to Oct. 15 now have until Jan. 15, 2021, to get that form to the IRS.

The tax agency notes, however, that because tax payments related to that return were due on July 15, those payments are not eligible for this relief. If you didn't pay what was due then, late payment penalties and interest 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 earlier September payroll and excise tax payments, the IRS says it will abate penalties on any of these taxes due on or after Sept. 4 and before Sept. 21 as long at the businesses made those deposits by Sept. 21.

No special action needed: As in other major disaster situations, affected taxpayers don't need to take special steps to get this tax relief.

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 Oregon wildfire relief efforts as part of a recognized government or philanthropic organization get the same tax relief as those directly affected by the wildfires

Major disaster relief updates, assistance: If you sustained damages from the California fires or any other major disaster, you might be able to get some help from the tax code.

When FEMA designates an area as a major disaster, you should check into claiming your uninsured disaster losses on your taxes. You also have the choice to claim the losses 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 disasters in 2020, that means you could wait and claim your losses on your return for this tax year that 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 and now have extra time to finish that job, you can claim your 2020 losses on your 2019 extended filing when you finally file it by your new disaster-delayed deadline.

If, however, you already filed your 2019 return but want to use your recent disaster losses in that filing, you'll need to send the IRS 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 claims related to the most recent California wildfire disaster, the FEMA number is 4569.

Other disasters, other help avenues: As noted earlier, this California wildfire tax announcement is just the latest in a very destructive 2020.

Here are this year's major disasters for which the IRS has provided deadline and other tax relief, and yes, this latest California declaration is in there to make the list complete:

  • Iowa derecho — extended returns due by Dec. 15
  • California wildfires (August) — extended returns due by Dec. 15
  • Louisiana areas hit by Hurricane Laura — extended returns due by Dec. 31
  • Oregon wildfires — extended returns due Jan. 15, 2021
  • Alabama areas hit by Hurricane Sally — extended returns due Jan. 15, 2021
  • California wildfires (September) — extended returns due Jan. 15, 2021

Taxpayers affected by natural disasters can find more in IRS Publication 547, the IRS web page Tax Relief in Disaster Situations special web page (click on the 2020 link for latest disaster/tax news) and, shameless plug alert, the ol' blog's special Storm Warnings collection.

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