We Texans, especially here in the usually more temperate central-to-southern part of the state, learned a hard lesson in February from Mother Nature. She can be as bad as she wants, whenever and wherever she wants.
We Lone Star Staters are not alone in dealing with the weather truth. Since our devastating winter storm, severe weather has raged across much of the country.
Now, folks in Alabama and Kentucky who endured recent tornadoes, flooding, landslides, mudslides and just plain old severe storms are getting tax relief similar to what the Internal Revenue Service earlier granted us here in Texas (and Oklahoma and Louisiana).
Affected Alabama and Kentucky taxpayers now get some tax break options, as well as a later 2020 tax-filing deadline.
In both cases, the IRS says that individuals who live in the presidentially declared, Federal Emergency Management Agency (FEMA) administered areas or who have businesses in them can use and qualifying losses to make disaster claims on their taxes.
In addition, the affected Bluegrass and Yellowhammer state residents get a bit more time to file tax forms and make required tax payments that otherwise would have been due on 2021's delayed May 17 filing deadline.
Tax Day this year is June 30 for some Kentucky filers. It's Aug. 2 for many in Alabama.
Those two dates, in addition to being important to the Kentuckians and Alabamans who are still dealing with their respective disasters' aftermaths, also earn this weekend's By the Numbers recognition.
Now to the extended filing and other federal tax help specifics for these two states, discussed in calendar order of their new deadlines.
Kentucky floods, land- and mudslide tax help: Severe storms, flooding and subsequent landslides and mudslides struck Kentucky starting Feb. 27. Folks who were in the hardest hit areas now have until June 30, instead of May 17, to file various individual and business tax returns and make related tax payments.
In its April 29 Kentucky announcement, the IRS says this storm-related relief includes most tax returns, including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; annual information returns of tax-exempt organizations; and employment and certain excise tax returns that have either an original or extended due date occurring on or after Feb. 27.
The affected Kentucky areas where the relief applies, per FEMA's investigation and disaster declaration, are Boyd, Breathitt, Carter, Casey, Clay, Cumberland, Elliott, Estill, Floyd, Franklin, Jackson, Johnson, Knott, Knox, Lawrence, Lee, Lincoln, Magoffin, Marion, Martin, Mason, Morgan, Ohio, Pike, Powell, Rockcastle, and Wolfe counties.
Annual KY returns, IRA contributions, and more: As noted, the new June 30 deadline covers 2020 individual income tax returns and any tax due with the filing. These taxpayers also have until the end of June to make 2020 IRA contributions.
Tax-exempt organizations that operate on a calendar-year basis and have a 2020 return due on May 17 now have until June 30 to file that paperwork, or more likely electronic material.
There's also good news for Kentuckians who missed the April 15 to make their first quarter 2021 estimated tax payment. That 1040-ES filing/payment now can be made as late as June 30. The second-quarter estimated payment normally due on June 15 also is delayed for a couple of weeks.
As for businesses, the June 30 extension applies to the quarterly payroll and excise tax returns normally due on April 30. Also, the IRS says penalties on deposits due on or after Feb. 27 and before March 15 will be abated as long as the tax deposits were made by March 15.
Alabama tornado, severe winds tax help: OK, if you just read the Kentucky storm-related tax relief, this is going to be a bit repetitive, but I don't want to shortchange Alabama taxpayers (and readers). Thanks for your indulgence and concern for fellow taxpayers going through tough disaster times.
Severe storm systems, mostly containing straight-line winds, but some of which included destructive long-track tornadoes, ravaged Alabama starting March 25. Folks who were in the hardest hit areas now have until Aug. 2, instead of May 17, to file various individual and business tax returns and make related tax payments.
In its Alabama announcement, also issued on April 29, the IRS says this storm-related relief includes most tax returns, including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; annual information returns of tax-exempt organizations; and employment and certain excise tax returns that have either an original or extended due date occurring on or after March 25.
The affected Alabama areas where the relief applies, per FEMA's investigation and disaster declaration, are Bibb, Calhoun, Clay, Hale, Jefferson, Perry, Randolph, and Shelby counties.
Annual AL returns, IRA contributions, and more: As noted, the new Aug. 2 deadline covers 2020 individual income tax returns and any tax due with the filing. These taxpayers also have until the second day of August to make 2020 IRA contributions.
Tax-exempt organizations that operate on a calendar-year basis and have a 2020 return due on May 17 now have until Aug. 2 to file that paperwork, or more likely electronic material.
There's also good news for Alabamans who missed the April 15 to make their first quarter 2021 estimated tax payment. That 1040-ES filing/payment now can be made as late as Aug. 2. The second-quarter estimated payment normally due on June 15 also is delayed for more than six weeks.
As for businesses, the Aug. 2 extension applies to the quarterly payroll and excise tax returns normally due on April 30. Also, the IRS says penalties on deposits due on or after March 25 and before April 9 will be abated as long as the tax deposits were made by April 9.
Different disasters, same rules: In both Kentucky and Alabama cases, if you haven't filed your 2020 federal tax return yet, you don't have to do anything special in connection with your new Tax Day deadline. The IRS automatically identifies taxpayers located in the covered disaster areas and applies filing and payment relief.
However, if you live or have a business located outside the covered disaster areas, but believe your circumstances also should be given special tax consideration, call the IRS disaster hotline toll-free at (866) 562-5227 to request this tax relief.
In addition, taxpayers who aren't in the covered disaster areas, but whose records necessary to meet a tax deadline are in the covered disaster area, are also entitled to relief the extended June 30 (in Kentucky) or Aug. 2 (in Alabama) deadlines.
The relief also applies to all relief workers who are affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster areas. The same relief also is granted to the families dealing with the tax matters of a person who was helping or visiting the covered disaster area and who was killed or injured as a result of the disaster.
Penalty, audit consideration, too: Sometimes the IRS' regular operations cross paths with disasters. In these cases, the IRS says don't worry.
If you're a Kentucky or Alabama taxpayer who's eligible for the storm tax relief in your state, but you get a late-filing or late-payment penalty notice for a tax task that now falls within the respective postponement periods, call the telephone number on the notice to have the IRS abate the penalty.
And if you're a storm-affected taxpayer dealing with the IRS on a collection or examination, aka audit, matter, the agency says you should explain how the disaster impacts you so that the IRS can provide appropriate consideration to your case.
More major disaster relief: Now is where I shift from disaster calendar updater to my familiar, due to so much horrid weather during my blogging tenure, role of disaster claim detailer.
Once again, I must remind recently affected Kentucky and Alabama residents, as well as anyone who has been or might one day be in the path of a rampaging Mother Nature (which in reality is basically all of us) that you could possibly get some additional tax relief beyond just extended filing deadlines.
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. In picking your filing year, the key is to determine which tax year will provide you with a better tax result, generally a lower tax liability or larger refund.
That means folks affected by the Kentucky and Alabama major disasters discussed here could claim those losses on their 2020 returns or wait until next filing season and claim them on their 2021 returns.
Claiming disaster losses: IRS Publication 547 has more details on how to do this. So does my earlier post on considerations in making a major disaster tax claim. But here are some highlights.
First, decide which tax year will give you a better tax result. If it's using your 2020 filing data, then claim it on the return that's now due on June 30 if you're in Kentucky or Aug. 2 if you're in Alabama. If you filed early this year, you can amend it by completing Form 1040X (and yes, you now can do so electronically!) and sending it to the IRS as soon as possible.
Regardless of when you make the disaster claim, you'll do so submitting IRS Form 4684, Casualties and Thefts, with your 2020 tax year or 2021 tax year Form 1040.
To ensure that the IRS, which is already backlogged and slow getting to many (OK, millions of) returns, you need to make sure the tax agency knows you're in need of your tax refund as soon as possible. Do this by noting the filing involves a disaster and include the FEMA designation number on your return.
Kentucky taxpayers claiming a disaster loss should put the disaster designation "Kentucky – Severe Storms, Flooding, Landslides, and Mudslides" in bold letters at the top of their Form 1040. Also, include FEMA 4595-DR-KY on your return.
For Alabama disaster loss filers, note that your return covers claims in connection with "Alabama Severe Storms, Straight-line Winds, and Tornadoes" in bold letters at the top of the form. Your disaster declaration number is FEMA 4596-DR-AL.
If you happen to need previously filed tax returns to help you complete your filing for disaster relief, the IRS is waiving its usual fees for the documentation. Just reference the same disaster designation and FEMA number when you submit Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, to the IRS.
Additional disaster information: I mentioned (and linked to) IRS Publication 547 earlier, but 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.
I say this all the time, but I sincerely hope you don't ever need to use any of my blog tips or IRS tax relief in connection with a natural disaster. But I've been blogging long enough and obsessing about destructive weather for even longer — hey, I've lived in Texas' tornado alley, as well as hurricane hot spot Florida, which was the topic of my second-ever post back in 2015 — to know we all likely will end up being hit by a mean Mother Nature.
So be prepared for whatever disaster is common in your area. You and your family's safety are more important than anything, even — especially! — taxes.
You also might find these items of interest:
- Post-storm home landscaping and tax tips for Earth Day 2021
- 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