Don't Mess With Taxes

The tornado that struck Afton, Iowa, in Union County on April 26, 2024. That county is one of eight that have been declared major disaster areas, meaning residents are eligible for a variety of federal assistance, including tax relief. (Photo by Dean Baron via National Weather Service)

Iowans in eight Hawkeye State counties that were struck by severe storms and tornadoes last month now have until Oct. 15 to file various federal individual and business tax returns and make tax payments.

This latest Internal Revenue Service disaster relief applies to individuals and households that live or have a business in Clarke, Harrison, Mills, Polk, Pottawattamie, Ringgold, Shelby, and Union counties.

Those counties sustained damage from storms in those locations on April 26, prompting the Federal Emergency Management Agency (FEMA) and White House to issue a major disaster declaration.

April, not May, storms: Since we’re in spring severe storm season overload this year, I must point out that this disaster declaration and tax relief announcement does not apply to this week’s devastation in Greenfield, Iowa.

A deadly twister tore through that small Adair County town on Tuesday, May 21, with other strong tornadoes hitting neighboring areas. Iowa Gov. Kim Reynolds on May 22 issued a disaster proclamation that will allow state resources to be used for recovery efforts. I expect FEMA and the IRS to soon issue separate federal disaster declarations for this week’s violent tornadoes in Iowa tornadoes.

For now, though, this latest Iowa federal disaster declaration and tax relief applies to the eight counties hit by the April 26 storms, shown in the FEMA map below.

The National Weather Service confirmed 24 tornadoes touched down in Iowa on April 26. Sixteen of those were in central or southern Iowa, with eight others in far western Iowa. Four tornadoes in western Iowa were rated EF-3, with peak wind speeds between 136-165 mph.

If FEMA adds any other areas to this disaster declaration, those individual and business taxpayers will get the same relief.

Delayed deadlines and more: The IRS relief notes that affected taxpayers who faced tax deadlines on or after April 26 and before Oct. 15 now have until the new mid-October due date to meet those tax filing and payment responsibilities.

That means the Oct. 15, 2024, deadline applies to —

• Quarterly estimated tax payments due on June 17 and Sept. 16, 2024; and
• Quarterly payroll and excise tax returns normally due on April 30, 2024, and July 31, 2024.

In addition, says the IRS, penalties on payroll and excise tax deposits due on or after April 26, 2024, and before May 13, 2024, will be abated as long as the tax deposits were made by May 13, 2024.

Most don’t need to call IRS: As for those in the designated disaster, there’s no need to call the IRS. The agency automatically provides the disaster relief to any taxpayer with whose address of record at the IRS is the disaster area.

If, however, you moved to an Iowa area in this disaster since your last tax filing, you might get a late filing or late payment penalty notice. In that case, call the number on the notice to have the penalty abated.

The IRS also 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 should contact the IRS at (866) 562-5227. This also applies to workers affiliated with a recognized government or philanthropic organization and who are in the disaster area assisting with relief activities.

Claiming a disaster tax deduction: OK, regular readers of the ol’ blog know what’s coming now. Uninsured disaster losses can be claimed as an itemized tax deduction.

And the tax code gives filers in disaster situations the option to choose the tax year in which to make the claim.

You can do so for the prior tax year, which would be the 2023 tax year. This would require an amended filing unless the Iowa disaster-area filers had requested an extension until Oct. 15. Yes, the same date as the new deadline for other tax tasks affected by the April 26 tornadoes.

Of you can wait and claim disaster losses for this 2024 tax year when you file that return next year.

Filing a prior-year, amended claim could get you a tax refund now, providing money you can use toward storm recovery efforts. But run the numbers to see which will get you more tax relief. It might be worth waiting to claim the loss on your 2024 Form 1040.

You can find more about potential disaster tax deductions in my post Considerations in making a major disaster tax claim.

You also can find more on taxes and major disasters in the following posts.

• Picking up the pieces after a major disaster (after Tennessee info)
• Document your property for tax, insurance claims before storms hit
• Retirement plan tax rules when using the savings to recover from a disaster
• IRS and other government resources can help you deal with a natural disaster
• Storm Warnings: Preparing for, recovering from, and helping those affected by natural disasters

Want even more? Then peruse the ol' blog's posts in the disaster category.

And check back periodically to see what FEMA and the IRS decide as far as relief in connection with the May 21 Iowa tornadoes.

Advertisements

🌟 Search Amazon Business and Money Books 🌟
The text link above is an affiliate ad. If you click through and then buy a product, I receive a commission.