Don't Mess With Taxes

UPDATE, Oct. 4, 2024: Parts of two more states, Illinois and Washington, are the latest to get a Feb. 3, 2025, tax deadline extension due to major disasters. Details in this post.

UPDATE, Aug. 29, 2024: The U.S. collection of Caribbean islands joins its fellow territory Puerto Rico in getting tax relief due to Tropical Storm Ernesto effects. It also ups the count to 10 of disaster areas across the country that have the new extended, early 2025 tax return due date.

The satellite view, courtesy National Oceanic and Atmospheric Administration's NESDIS/STAR GOES-East imagery, of Tropical Storm Ernesto as it approached the U.S. Virgin Islands late afternoon Aug. 13.

As the Federal Emergency Management Agency (FEMA) continues its disaster evaluations, the areas eligible for tax relief, and a new filing deadline of Feb. 3, 2025, for extended returns, grows.

The U.S. Virgin Islands is the latest jurisdiction to join that group, thanks to damages from Tropical Storm Ernesto.

This FEMA disaster declaration comes on the heels of similar assessments for fellow territory Puerto Rico, also raked by the season’s fifth named storm, and South Dakota, parts of which were struck by severe storms, straight-line winds, and flooding earlier this summer.

These disaster additions bring to 10 the number of disaster areas where U.S. taxpayers now share a new Feb. 3, 2025, tax deadline to complete their 2023 tax year returns instead of the original Oct. 15 one granted when they filed for an extension.

Declared disaster areas: IRS tax relief moves, as per procedure, follow official major disaster declarations by the president based on findings by FEMA.

This means individual and business taxpayers in the Mount Rushmore State and the two U.S. territories get special consideration for a variety of tax task deadlines related to their specific disasters.

FEMA designated 25 South Dakota counties as disaster areas after they were struck by severe storms, straight-line winds, and flooding that began on June 16. They are Aurora, Bennett, Bon Homme, Brule, Buffalo, Charles Mix, Clay, Davison, Douglas, Gregory, Hand, Hanson, Hutchinson, Jackson, Lake, Lincoln, McCook, Miner, Minnehaha, Moody, Sanborn, Tripp, Turner, Union, and Yankton.

In Puerto Rico’s case, FEMA’s emergency declaration, and subsequent IRS tax relief, applies to all of the island’s 78 municipalities. They sustained substantial damage as, on Aug. 13, Tropical Storm Ernesto moved through the Leeward Islands, battering the island with wind gusts of up to 81 miles per hour and almost a foot of rain.

Earlier that same mid-August day, Tropical Storm Ernesto’s destructive path had taken it across the neighboring U.S. Virgin Islands. FEMA’s declaration covers the islands of Saint Thomas, Saint John, and Saint Croix, and the other islands within their country-equivalent jurisdictions.

Later 2023 filing deadline: Notably, individual taxpayers in the affected South Dakota, Puerto Rico, and U.S. Virgin Islands disaster areas who had filed for an extension to submit their 2023 tax returns now have several more months to do that.

Instead of facing the usual Oct. 15 due date, those 1040 forms must be filed by Feb. 3, 2025.

Again, the new tax deadline is only for filing those extended forms. When the taxpayers sought more time, by the April 15 Tax Day well before the disasters hit, the extension was granted to get the paperwork done, either by hand or electronically.

Any tax that was due should have been paid when the taxpayers sent in their Form 4868 extension. Unpaid amounts have been accruing late payment and interest charges. Those added amount will continue until the full tax balance is paid.

Other tax deadlines also affected: In addition to the new due date for extended filings, the Feb. 3, 2025, deadline applies to other tax obligations.

For South Dakota taxpayers, this includes —

• Quarterly estimated income tax payments normally due on June 17 and Sept. 16, 2024, and Jan. 15, 2025.
• Quarterly payroll and excise tax returns normally due on July 31 and Oct. 31, 2024, and Jan. 31, 2025.

The IRS says that penalties businesses might face for failing to make payroll and excise tax deposits due on or after June 16, 2024, and before July 1, 2024, will be abated, as long as the deposits were made by July 1, 2024.

For Puerto Rico and U.S. Virgin Islands taxpayers, the affected taxes include —

• Quarterly estimated income tax payments normally due on Sept. 16, 2024, and Jan. 15, 2025.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, and Jan. 31, 2025.

As for business tax matters, the IRS will abate penalties for failing to make payroll and excise tax deposits due on or after Aug. 13, 2024, and before Aug. 28, 2024, as long as the deposits were made by Aug. 28, 2024.

Claiming a disaster tax deduction: Another thing this latest group of disaster-area taxpayers share is a possible itemized tax deduction for any storm-related uninsured losses.

They, as can all taxpayers in major disaster areas, also 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 the South Dakota, Puerto Rico, and U.S. Virgin Islands situations, the claim would be either on their 2024 tax return to be filed next year, or for the 2023 tax year. Those who got an extension to file their 2023 returns now can, if they choose, claim these losses on that return when they file it by Feb. 3, 2025.

Affected taxpayers who’ve already filed 2023 returns, but want to claim losses for that tax year, will 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. It is DR-4807-SD for South Dakota filers. It’s EM-3610-PR for Puerto Rico taxpayers, and EM-3611-VI for filers in the U.S. Virgin Islands.

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.

Prior relief, continuing threats: With these latest IRS disaster tax relief announcements, South Dakota, Puerto Rico, and the U.S. Virgin Islands join the long list of business and individual taxpayers who now have a Feb. 3, 2025, deadline.

Other disaster areas with this due date next year are in Minnesota, which sustained flooding; Florida, Georgia, North Carolina, South Carolina, and Vermont, which were raked by Hurricane Debby and her remnants; counties in Kentucky and Missouri that were hit by severe storms; and Texas taxpayers in Hurricane Beryl's path.

And Mother Nature isn’t likely to take a break. The hurricane season typically picks up in September. Since that’s only days away, if you haven’t made storm preparations, it’s time to do so now.

You also might find these items of interest:

• Resources to help deal with major natural disasters
• A pre-disaster inventory can pay off when filing insurance or tax claims
• Storm Warnings: Preparing for, recovering from, and helping those affected by natural disasters

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