Don't Mess With Taxes

Hurricane Lee in the Atlantic on Sept. 11, 2023, before heading north.

Hurricane Lee was a strange, scary storm. It formed off the coast of Africa and rapidly intensified into a large category 5 hurricane.

But instead of heading for the lower U.S. east coast as is typical this time of year, it turned northward.

That track sent Lee toward New England, where rotated offshore before making official landfall Sept. 17 in Nova Scotia, Canada, as a strong extratropical cyclone.

Don't be deceived by meteorologists' extratropical classification. Lee still did damage to the already water-logged region.

That's why the Federal Emergency Management Agency (FEMA) declared all of Maine and Massachusetts disaster areas, and the Internal Revenue Service followed with tax relief for those residents.

That's right, the tax relief applies to individuals and businesses in all of Maine's 16 counties, as well as those in Massachusetts' 14 counties. These taxpayers now join Hurricane Idalia-affected filers with a delayed Feb. 15, 2024, tax filing and payment deadline.

Affected filings with Feb. 15 due date: The postponement period for Maine and Massachusetts taxpayers applies to various tax filing and payment deadlines that occurred from Sept. 15, 2023, through the new mid-February 2024 due date.

This means the Feb. 15, 2024, deadline applies to the following tax actions.

• Individuals who had a valid extension until Oct. 16 to file their 2022 tax return.
  
  NOTE: The Feb. 15, 2024, deadline applies to the filing of 1040 forms only. Extension requests are granted for submission of tax forms; the extension does not delay payments. Any tax associated with 2022 filings was due by April 18, 2023, meaning those payments are not eligible for the Idalia relief. Penalties and interest will continue accrue on unpaid 2022 taxes.
  
  
• Quarterly estimated income tax payments normally 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 ran 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.

The IRS also said penalties for the failure to make payroll and excise tax deposits due on or after Sept. 15, 2023, and before Oct. 2, 2023, will be abated as long as the deposits are made by Oct. 2, 2023.

Claiming a disaster tax deduction: Federal tax law allows 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.

Sorry to be repetitive, but Mother Nature's all too frequent bad moods are forcing my blogging hand. So here goes. You can find more about disaster claim filings in my post Considerations in making a major disaster tax claim.

I also want to reiterate a part of that post here, specifically the choice of tax year in claiming eligible disaster losses. You can claim qualifying losses in either the year the disaster occurred, or the previous tax year.

Affected Maine and Massachusetts taxpayers who can claim Hurricane Lee losses as an itemized tax deduction need to carefully determine whether to count them on their 2022 or 2023 tax returns.

Taxpayers who got extensions to file 2022 returns can make the claims on that return now due Feb. 15, 2024.

However, Lee-affected New Englanders who've already filed their 2022 returns can amend that filing and claim the hurricane losses on Form 1040-X if that provides a better tax result. Or if claiming qualifying disaster losses on their 2023 returns is preferable, then they can do that on when they file this year's return that's due by April 15, 2024.

Regardless of which tax filing you choose to make the disaster loss claim, include the FEMA disaster number on all related filings. That's EM-3598-ME for Maine filers. It's EM-3599-MA for Massachusetts taxpayers.

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
• Document your property for tax, insurance claims before storms hit
• Storm Warnings: Preparing for, recovering from, and helping those affected by natural disasters

Hurricane Lee map created by Jasper Deng using Wikipedia: WikiProject Tropical cyclones/Tracks. The background image is from NASA.

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