Don't Mess With Taxes

A full Cannon River rushing though Northfield, Minnesota, after rainfall from severe storms in June. (National Weather Service photo)

It’s been that kind of weather year. The start of a new week brings another Internal Revenue Service announcement of disaster area tax relief.

This time, the areas getting special tax consideration were hard hit by severe storms and subsequent flooding in Minnesota.

The affected North Star State individual and business taxpayers now have until Feb. 3, 2025, to meet a variety of filing and payment obligations.

Affected counties: The destructive weather throughout Minnesota began June 16, and produced damages in the following 25 counties.

As always, if Federal Emergency Management Agency (FEMA) adds other areas to this disaster declaration, they will get the same tax relief.

Feb. 3, 2025, deadline: The affected Minnesota individual and business taxpayers will get until next February to meet a variety of tax filing and payment due dates. These are deadlines that occur from the start of the disaster event on June 16 through the new Feb. 3, 2025 postponement period deadline.

Specifically, the Feb. 3, 2025, deadline applies to —

• Any individual, business, or tax-exempt organization that has a valid extension until Oct. 15 to file their 2023 federal return. The IRS noted, however, that payments on these extended Form 1040 filings are not eligible for the extra time because any due tax was required to be paid by April 15, before the Minnesota storms and floods occurred.
• Quarterly estimated income tax payments normally due on June 17, 2024, and Sept. 16, 2024, as well as the final 2024 1040-ES payment due Jan. 15, 2025.

Affected Minnesota business taxpayers should note that the IRS will abate any penalties for failing to make payroll and excise tax deposits due on or after June 16, 2024, and before July 1, 2024, as long as the deposits were made by July 1, 2024.

IRS tax relief mostly automatic: Another standard IRS disaster tax relief practice also means that Minnesota taxpayers in the affected 25 counties don’t need to contact the tax agency to get this special tax consideration. The tax agency automatically provides it to any taxpayer whose address of record with the tax agency is located in the disaster area.

If your official IRS address isn’t in the disaster area — say, for example, you moved to the storm-struck locale after you filed your last return — you will get the same relief. However, you’ll also probably get an IRS late-filing or late-payment notice first. In these cases, call the number on the notice to have the penalty abated.

The IRS also will provide tax relief consideration to 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.

Similar tax relief consideration also will be given to those assisting disaster relief activities as long as they are affiliated with a recognized government or philanthropic organization.

Taxpayers who live outside the disaster area, but believe they qualify for tax relief need to call the IRS toll-free at (866) 562-5227.

Claiming a disaster tax deduction: Finally, be sure to take advantage of other tax relief available to those in major disaster areas. This generally is claiming uninsured disaster losses as an itemized tax deduction.

You get to choose the tax year in which to make the claim. It can be made in either the tax year in which the loss occurred, or for the prior tax year.

In this Minnesota disaster area case, that would be either the 2024 return to be filed next year, or on your 2023 tax return. If you got an extension to file your 2023 return, that gives you until Feb. 3, 2025, to decide. If you’ve already filed your 2023 return and want to claim losses for that tax year, you’ll need to file an amended return.

Filing a prior-year disaster claim could get you a tax refund now, providing money you can use toward storm recovery efforts. But run the numbers to see which filing year will get you more tax relief.

Whenever you do file a return in which special disaster tax relief is granted or for which you are claiming a disaster deduction, write the FEMA declaration number on your return. This Minnesota disaster declaration number is DR-4797-MN.

You can find more on making a disaster tax deduction claim in IRS Publication 547, Casualties, Disasters, and Thefts, as well as in my post Considerations in making a major disaster tax claim.

Hurricane update: As noted at the start of this post, Mother Nature just won't take a break. Today the National Hurricane Center announced that it now is monitoring the 2024 hurricane season's fifth named system.

The early forecast has Tropical Storm Ernesto hitting Puerto Rico by tomorrow (Tuesday, Aug. 13) afternoon. The main damage is expected, right now, to be heavy rain. Residents of the U.S. territory need to get ready now.

You also might find these items of interest:

• Resources to help deal with major natural disasters
• Hurricane season 2024 looks to be fulfilling its most-active forecast. Get ready now.
• Storm Warnings: Preparing for, recovering from, and helping those affected by natural disasters

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