Don't Mess With Taxes

UPDATE, Oct. 6, 2022: North and South Carolina, which were hit when Ian made a second U.S. landfall after devastating southwest Florida, now also get until Feb. 15, 2023, to meet various tax deadlines. More in my Carolinas/Ian follow-up post.

This image from the NASA/Landsat Operational Land Imager (OLI) was taken about three hours before Hurricane Ian made landfall on Sept. 28 in Cayo Costa, Florida. (NASA Earth Observatory image by Joshua Stevens, using Landsat data from the U.S. Geological Survey, GEOS-5 data from the Global Modeling and Assimilation Office at NASA Goddard Space Flight Center, and roads from OpenStreetMap. Check out the companion video of Ian's path.)

Everyone saw Ian coming. The White House approved an emergency declaration allowing the Federal Emergency Management Agency (FEMA) to get ready to provide help to Floridians even as the system was "just" an approaching tropical storm.

So it's no surprise that the Internal Revenue Service also has acted quickly to provide tax relief to Hurricane Ian victims in the Sunshine State.

The day after Ian's Sept. 28 landfall, the IRS announced that impacted individuals and businesses throughout Florida have until Feb. 15, 2023, to file various federal tax returns and make tax payments.

Official FEMA boundaries: This tax relief is available to any area designated by the FEMA. The current list of eligible localities is always available on the disaster relief page on IRS.gov, as well as on FEMA's Hurricane Ian web page.

As the FEMA disaster declaration map below shows, and the IRS noted in its announcement, residents across the entire state are eligible for some sort of federal assistance.

The tax relief also applies to tax due dates before Ian made landfall. Specifically, various tax filing and payment deadlines are postponed until next mid-February if they occurred starting on Sept. 23 as the dangerous system was churning into the Gulf of Mexico.

Federal tax relief details: Most immediately, the IRS announcement means individuals who had filed for a 2021 tax return filing extension, due this year on Oct. 17, now have until Feb. 15, 2023, to submit that Form 1040.

Again, note that this added time only is for filing the form. Since the extension request had to be made by this year's April 18 Tax Day, any due tax should have been paid by then. So if you still owe some tax with an extended return, interest and penalties will continue to accrue.

The new Feb. 15, 2023, deadline also applies to the final 2022 estimated tax payment that normally would be due on Jan. 17, 2023.

Businesses get more time, too: Businesses with an original or extended due date also have the additional time.

This includes, among others, calendar-year corporations whose 2021 extension runs out on Oct. 17. Similarly, tax-exempt organizations also have the additional time, including for 2021 calendar-year returns with extensions due to run out on Nov. 15.

Businesses facing the normal quarterly payroll and excise tax return deadlines of this upcoming Oct. 31 and Jan. 31, 2023, get more time to make those filings. Any penalties on payroll and excise tax deposits due after the emergency's Sept. 23 start date and before Oct. 10 will be abated as long as the deposits are made by Oct. 10, 2022.

No need to request new deadline: As in all 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.

That means affected Florida taxpayers do not need to contact the IRS to get this Hurricane Ian related relief.

If, however, you get a late filing or late payment penalty notice from the IRS in connection with a tax matter that has an original or extended filing, payment, or deposit due date falling within the Hurricane Ian postponement period, do call the number on the notice to have the penalty abated.

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. This could be the case with filers in neighboring states whose tax records are in Florida. In these cases, call the IRS toll-free at (866) 562-5227 to discuss your situation.

The IRS also is offering the relief to individuals who are assisting relief efforts as part of a recognized government or philanthropic organization.

Possible added tax filing relief: Finally, many Hurricane Ian victims might be able to get additional help when they file their tax returns.

When you're in a federally declared disaster area and suffer uninsured or unreimbursed disaster-related losses, you may be able to claim those losses on your federal tax return.

You also have a choice as to which tax year you may claim them. You can declare the losses the year the disaster occurred, which would be on your 2022 return filed in 2023, or in the prior year, which would be on 2021 taxes.

Florida filers who got an extension to file their 2021 returns and who want to claim their Ian losses on that filing can do so when they do submit their extended Form 1040 by next Feb. 15. Taxpayers who have already filed 2021 taxes can file an amended return using Form 1040-X to claim the losses for that prior year.

In deciding which tax year to choose, you need to run the numbers to make sure that your choice of tax year provides you with the most advantageous tax result, either a smaller tax bill, or a refund, possibly sooner, to help with your recovery expenses.

You can read more about making major disaster loss tax claims in IRS Publication 547, as well as in my earlier post on what to consider when making a major disaster tax claim.

Whichever tax year you choose to make an Ian loss claim, put the disaster designation, "FL Hurricane Ian" in bold letters at the top of the form. Also include the FEMA disaster declaration number DR-4673-FL on the return.

More Feb. 15, 2023, filers: Floridians who endured Hurricane Ian are the latest to be granted the next February federal tax deadline.

Puerto Rico residents were granted the Feb. 15, 2023, extended deadline after being hit by Hurricane Fiona.

Taxpayers in Hinds County, Mississippi, have until Feb. 15, 2023, to file because of flooding there that created a municipal water crisis.

Some Alaskans who were victims of September storms and flooding were given until Feb. 15, 2023, to file various federal individual and business tax returns and make tax payments.

And the Feb. 15, 2023, list likely will grow. I suspect that some in South Carolina, where Ian made another landfall as a category 1 storm, and residents of other areas of the East Coast affected as it moved inland might soon join the Feb. 15, 2023, tax deadline club.

UPDATE, Oct. 6, 2022: North and South Carolina have been added to the group of disaster stricken states where taxpayers now have, among other tax relief, a new Feb. 15, 2023, extended 2021 tax return filing deadline.

That's why that date is this weekend's By the Numbers figure.

You also might find these items of interest:

• Don't be lulled by slow 2022 hurricane season. Prepare now
• Don't fall for disaster charity scams
• Beware: Land sharks & recovery scams follow every disaster
• Storm Warnings: Preparing for, recovering from, and helping those affected by natural disasters

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