Tax and weather watchers knew this was coming. Today, the Internal Revenue Service made it official.
The tax agency announced that all individual and business taxpayers in South Carolina are eligible for tax relief in connection with damages from Hurricane Idalia, which started its journey across the Palmetto State as a tropical storm on Aug. 29.
The SC trek was after Idalia made landfall in Florida's Big Bend region two days earlier as a category 3 hurricane, prompting the IRS to grant most of the Sunshine State tax relief.
Now South Carolinians, like their Florida neighbors, have until Feb. 15 to meet various tax filing and payment deadlines.
Statewide storm path damage: Although Idalia had weakened to a tropical storm by the time she pushed into South Carolina, her heavy rainfall and strong wind gusts caused substantial damage across the state.
That's why Federal Emergency Management Agency (FEMA) included all of South Caolina's 46 counties in its major disaster designation, made official on Aug. 31 by President Joe Biden's declaration.
If you're looking at the above FEMA map on a small device, here are the counties covered under the major, presidential disaster declaration: Abbeville, Aiken, Allendale, Anderson, Bamberg, Barnwell, Beaufort, Berkeley, Calhoun, Charleston, Cherokee, Chester, Chesterfield, Clarendon, Colleton, Darlington, Dillon, Dorchester, Edgefield, Fairfield, Florence, Georgetown, Greenville, Greenwood, Hampton, Horry, Jasper, Kershaw, Lancaster, Laurens, Lee, Lexington, Marion, Marlboro, McCormick, Newberry, Oconee, Orangeburg, Pickens, Richland, Saluda, Spartanburg, Sumter, Union, Williamsburg, and York.
Per usual disaster protocol, the IRS subsequently deemed that all South Carolina individuals and households that reside or have a business in the state now qualify for tax relief.
Tax actions with new Feb. 15 deadline: The federal tax relief postpones various tax filing and payment deadlines that fall from Idalia's Aug. 29 entry into South Carolina through 15, 2024.
During this postponement period, affected individuals and businesses will have until that mid-February date next year to file returns and pay any taxes that were originally due during this period.
The new Feb. 15, 2024, deadline applies to —
- 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 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.
The IRS also said penalties for the failure to make payroll and excise tax deposits due on or after Aug. 29, 2023, and before Sept. 13, 2023, will be abated as long as the deposits are made by Sept. 13, 2023.
No need to call IRS: The IRS relies on its taxpayer database for disaster relief, meaning it automatically provides filing and penalty relief to any taxpayer whose IRS address of record is in the disaster area.
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 South Carolina after filing their return and did not notify the IRS of their new address.
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, 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 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 South Carolina taxpayers who can claim Hurricane Idalia 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.
Affected South Carolina taxpayers who've already filed their 2022 returns can amend that filing and claim the hurricane losses on their Form 1040-X.
However, if it's better for them to claim disaster losses on their 2023 returns, then they can do that on that filing 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 EM-3597-SC on all related filings.
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
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