Don't Mess With Taxes

An aerial view of Mayfield, Kentucky, one of the hardest hit communities during the Dec. 10-11 tornado outbreak in the western half of the state, shows the devastation of the community. (Photo by State Farm via Flickr CC 2.0 and Wikimedia)

Kentucky residents who were in the path of last weekend's deadly tornadoes have a later 2022 federal tax filing deadline.

The Internal Revenue Service today announced that Kentucky taxpayers in, so far, eight counties will have until May 16, 2022, to file various individual and business tax returns and make tax payments.

UPDATE, Dec. 16, 2021: The Kentucky Department of Revenue announced that the state will follow the IRS deadline change and allow affected taxpayers until May 16, 2022, to file Kentucky income tax returns and submit tax payments for individual income tax, corporate income tax, income tax withholding, and limited liability entity tax.

In addition to the devastating twisters, the line of storms that erupted on Dec. 10 also produced other wind damage and flooding rains that led to disaster designations for the Kentucky counties of Caldwell, Fulton, Graves, Hopkins, Marshall, Muhlenberg, Taylor and Warren.

If the Federal Emergency Management Agency (FEMA) subsequently determines that additional areas also merit disaster relief in Kentucky or neighboring states, the IRS' tax relief will extend to those locations, too.

I'll update this post, but you also can keep track of localities eligible for special tax consideration by checking IRS.gov's disaster relief page.

Later 2021 Tax Day: After two years of COVID-related Tax Day delays, the IRS is looking to get back on its regular mid-April filing schedule in 2022. But the annual filing due date next year is a tad later due to another occasional occurrence.

Emancipation Day 2022 is on Friday, April 15. When that official District of Columbia holiday falls on Tax Day, the federal filing deadline is moved to the next business day. That makes 2021 returns due on Monday, April 18, 2022.

Kentucky taxpayers affected by the Dec. 10-11 tornado (and more) outbreak get another month, until May 16, to file their individual 1040s. The same extension also is granted to various 2021 business returns normally due on March 15 and April 18.

Estimated, IRA tax deadline later, too: The filing extension also means that affected taxpayers now have until May 16 make quarterly estimated income tax payments that, for other filers, are due next Jan. 18 and April 18.

Note, however, this will mean you might have to come up with a larger-than-expected amount for Uncle Sam in May. The extended May 16 payment deadline will include 2021's 4th quarter estimated tax payment postponed from January, the first estimated payment for 2022 usually due in April, and any tax due with your 2021 tax return. Look into the possible financial hit and make any arrangements as early as you can.

On a more positive note, the new Tax Day deadline for affected Bluegrass State taxpayers means they can make 2021 IRA contributions as late as May 16.

Extended business deadlines: Farmers who choose to forgo making estimated tax payments and normally file their returns by March 1 will now have until May 16, 2022, to file their 2021 return and pay any tax due.

Also, quarterly payroll and excise tax returns normally due on Jan. 31 and May 2, 2022, don't have to be paid until next May 16.

The IRS also says that penalties on payroll and excise tax deposits due on or after Dec. 10 and before Dec. 27 will be abated as long as the deposits are made by Dec. 27, 2021.

Again, check the disaster relief page for details on other returns, payments and tax-related actions qualifying for the additional time.

Automatic relief: One thing the Kentucky taxpayers don't have to worry about is confirming their eligibility for the relief with the IRS. The tax agency automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area.

If, however, you're in the extended-filing disaster area but get a late-filing or late-payment penalty notice from the IRS, call the number on the notice to have the penalty abated.

And if you're not technically in the designated disaster areas, but the records and other info you need to meet a tax deadline during the postponement period are in the area, let the IRS know. You can call the IRS toll-free at (866) 562-5227 to discuss your situation.

And if you're in the disaster areas providing relief services as part of a recognized government or philanthropic organization and would like the same tax relief, you also should talk with the IRS.

Claiming losses on your taxes: Finally, the IRS (and I!) want to remind folks who sustained losses, business or personal, that weren't covered by or reimbursed by insurance might be able to claim those amounts as itemized tax deductions.

Since the Kentucky storms were White House declared major disaster, you also get the option to claim the eligible losses on either the return for the year the loss occurred, which in this instance is your 2021 return now due May 16, 2022, or on your tax return for the prior tax year, which for this disaster is the 2020 filing.

Regardless of which tax year filing you choose to make the disaster loss claim, the IRS asks that you write the FEMA declaration number — 4630DR — on any return claiming a loss.

You can read more about making major disaster loss tax claims in my earlier post on what to consider when making a major disaster tax claim.

If you want to claim these losses on your 2020 taxes, you'll have file an amended return for that year. You can read more about amended returns in my post about Form 1040-X.

You also can find more on disaster claims in IRS Publication 547. Also take a look at DisasterAssistance.gov for information on disaster recovery.

And you also might find these disaster-related blog items of interest:

• How you can help Kentucky tornado victims
• All Mississippi, some California filers get new Jan. 3, 2022, tax deadline
• IRS and other government resources can help you deal with a natural disaster

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