The Internal Revenue Service has made it official. Hawaii wildfire victims in Maui and Hawaii counties have been granted tax relief, including a Feb. 15, 2024, deadline to file various federal individual and business tax returns and make tax payments.
The IRS action came, as is the usual procedure, after the Federal Emergency Management Agency (FEMA) declared the islands disaster areas.
The tax relief applies to deadlines from the outbreak of the fires on Aug. 8 through the postponement period that ends next Feb. 15.
Various federal deadlines delayed: The mid-February 2024 day is the deadline to file returns and pay any taxes that were originally due during the almost six-month period.
This includes —
- 2022 individual tax returns where taxpayers requested an extension until Oct. 16, 2023, to file these Form 1040s. However, as the IRS points out, since tax payments related to 2022 returns were due on April 18, 2023, those payments are not eligible for this relief. Any unpaid amounts will continue to accrue interest and penalty charges.
- Quarterly estimated income tax payments for the 2023 tax year that normally are due on Sept. 15, 2023, and Jan. 16, 2024.
- Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, 2024.
- Calendar-year partnerships and S corporations whose 2022 extensions run out on Sept. 15, 2023.
- Calendar-year corporations whose 2022 extensions run out on Oct. 16, 2023.
- Calendar-year tax-exempt organizations whose extensions run out on Nov. 15, 2023.
In addition, businesses that face penalties for the failure to make payroll and excise tax deposits due on or after August 8, 2023, and before September 7, 2023, will have those levies abated as long as the deposits are made by Sept. 7, 2023.
State tax relief, too: In addition to the federal tax relief, Hawai'i officials also announced that wildfire victims also get state tax consideration.
The Hawai'i Department of Taxation says it will review requests by affected taxpayers for extensions to file and pay Hawaiʻi taxes, for waivers of any penalties and interest, and for relief based on interruptions to mail delivery, on a case-by-case basis.
This relief applies to all taxes that the state's revenue department administers, including general excise, transient accommodations, net income, tobacco, and liquor.
All Hawaiʻi tax returns in which relief is requested in connection with the disaster should be submitted by paper filing and clearly labeled "2023 Wildfire Relief" on the top center of the return. Do not put the disaster entry in the "DO NOT WRITE IN THIS SPACE" area in the upper right corner of any return.
Affected taxpayers whose addresses in Department of Taxation files is not within the disaster areas also can request state relief. They need to also include a brief statement as to how the disaster adversely affected their ability to meet their tax obligations. Again, Hawai'i tax officials will consider these statements on a case-by-case basis.
No need to call IRS: The IRS also relies on its taxpayer database for disaster relief. It automatically provides filing and penalty relief to any taxpayer whose IRS address of record is in the disaster area. So Hawai'i taxpayers on Maui and the Big Island don't have to contact the agency to get the relief.
However, it is possible an affected taxpayer may not have an IRS address of record located in the disaster area. This could be the case, for example, where someone moved to Aloha State area after filing their return. In these circumstances, affected taxpayers could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer 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, for example, on other Hawai'ian islands, but whose records necessary to meet a deadline occurring during the postponement period are located in the affected areas. These taxpayers should contact the IRS at (866) 562-5227.
This option also applies to workers assisting the relief activities provided through 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 Maui and Hawai'i County taxpayers who can claim losses as an itemized tax deduction need to carefully determine whether to count their flooding losses on their 2022 or 2023 tax returns.
If they decide to wait, they will make the disaster loss claims on their 2023 returns due by April 15, 2024.
But if they find it's better for their tax and financial situations to claim the losses on their 2022 return, those who got extensions can do so on that return they now have until Feb. 15, 2024, (which is this weekend's By the Numbers figure) to file.
Affected Hawai'ian fire disaster victims who've already filed their 2022 returns can amend that filing and claim the fire losses on their Form 1040-X.
Regardless of which tax filing you choose to make the disaster loss claim, include the FEMA disaster number on the filing. That's DR-4724-HI for the Hawai'ian fires.
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:
- Picking up the pieces after a major disaster
- Help Hawai'ian fire victims, but check out charities first
- Document your property for tax, insurance claims before storms hit
- Storm Warnings: Preparing for, recovering from, and helping those affected by natural disasters
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