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Vermont flood victims get tax relief, including a Nov. 15 deadline for 2022 extensions and estimated taxes

Vermont-rural-stream_brian-urso-ERYhbze23_o-unsplash-1
A Vermont waterway in a more bucolic time. (Photo by Brian Urso on Unsplash)

Vermont was inundated earlier this week by what many are saying is the worst flooding since Tropical Storm Irene devastated the area 12 years ago. That's still to be determined, as state and federal officials continue to literally dig out of the waters' aftermath, as shown in the tweet below.

 

However, the Federal Emergency Management Agency (FEMA) wasted no time in declaring the entire state a major disaster area.

All 14 of the Green Mountain State's counties now are eligible for some type of federal assistance. The Internal Revenue Service also has granted tax relief to the state's individual and business taxpayers.

New extended filing deadline: They now have until Nov. 15 file various tax returns and make tax payments.

Specifically, the IRS announced that it is postponing tax deadlines that were originally due between July 9, when the flooding began, and Nov. 15.

This tax relief applies to the following returns and payments.

  • Valid extensions by individuals to file their 2022 return due to run out on Oct. 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief. If the proper amount was not paid by that date, penalties and interest still apply.
  • Estimated income tax payments for the third quarter of 2023, that normally due on Sept. 15.
  • Business quarterly payroll and excise tax returns, normally due on July 31 and Oct. 31.
  • Businesses with an original or extended due date including, among others, calendar-year partnerships and S corporations whose 2022 extensions run out on Sept. 15, and calendar-year corporations whose 2022 extensions run out on Oct. 16.

In addition, penalties on payroll and excise tax deposits due after July 9 and before July 25, will be abated as long as the deposits are made by July 25.

No need to call: The IRS automatically provides filing and penalty relief to any taxpayer whose IRS address of record is in the disaster area. So Vermont taxpayers don't have to contact the agency to get the relief.

However, if a taxpayer in a disaster area receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, that person should 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. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at (866) 562-5227.

This option also applies to workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Claiming a disaster tax deduction: Federal tax law also provides those who've endured a major disaster the option to claim any uninsured losses as a tax deduction. You also get to decide on the tax year you use to make the claims.

I discuss this option in the all-too-frequent disaster declaration posts here on the ol' blog. You can find more about disaster claim filings in my post Considerations in making a major disaster tax claim.

But I do want to reiterate here the tax year choice. Affected Vermont taxpayers who can claim losses as an itemized tax deduction need to carefully determine whether to count their flooding losses on their 2023 returns that they'll file next year, or on their 2022 taxes.

That decision needs to be made more quickly by taxpayers who extended their 2022 return filing, which now is due on Nov. 15.

Vermont taxpayers who already filed 2022 returns but want to the flood losses for that year will have to file an amended return using Form 1040-X.

Include FEMA data, get more filing info: Whenever you decide to make the storm claims, include the FEMA disaster number on the filing.

Vermont flooding July 2023 FEMA declaration EM3595

For this New England disaster, write "Vermont Flooding" and add the FEMA disaster declaration number, which is EM-3595-VT.

You can read more about making major disaster loss tax claims in IRS Publication 547. The IRS' Disaster Assistance and Emergency Relief for Individuals and Businesses page also has more information on returns, payments, and tax-related actions for qualifying taxpayers.

Finally, you also might find these earlier blog posts of interest:

 

 

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