Over the past few weeks, everyone has been watching New Orleans deal with the impact of Hurricane Ida. While New Orleans and other areas are recovering from floods, fires are consuming California. Since July 14, 2021, parts of California have been ablaze, thousands of homes have been leveled, and many individuals have had to evacuate their homes. As of September 2021, more than 1,968,326 acres of land have burned to the ground, and an approximate 3,050 structures have been damaged or destroyed this year. Some of the buildings that have existed since California’s Gold Rush are now destroyed.
The California wildfires have had a major impact on the nation. Many people are facing some of the most trying times in recorded history. To help support individuals impacted by the California wildfires, the IRS has offered some tax relief.
Federal tax relief
For those impacted by the California wildfires who are living in a federally declared disaster area, the IRS has some help for you. Victims of wildfires that began July 14, 2021, now have until November 15, 2021, to file various individual and business tax returns and also make tax payments. Impacted individuals and businesses now have the following extensions:
- Individuals who filed an extension for October 15 now have until November 15 to file their tax return.
- Individuals who have an estimated payment due on September 15 now have until November 15 to make an estimated payment.
- Quarterly payroll and excise taxes that were due on August 2 are now due on November 15.
- Businesses that previously had a July 14 filing deadline now have until November 15 to file their return.
How to notify the IRS that you have been impacted
If you have been impacted by the California wildfires, the IRS has automatically identified taxpayers who are located in the covered area. Additionally, if you or your business have been impacted by the wildfire and you are not located in the covered disaster area, you should call the IRS at 866-562-5227 to request tax relief.
State tax relief
On September 9, the state of California Franchise Tax Board announced that it is in conformity with the federal tax filing guidelines. If you've been impacted by the wildfires and live in an area that has been declared a state of emergency by the governor, you have until November 15 to file a series of state tax returns.
Casualty and disaster loss
Victims of California's wildfire can claim a disaster loss on both their state and federal tax returns. For the federal tax return, victims can claim the loss on IRS Form 4684. When claiming the loss, the victim must enter the FEMA disaster number on the form.
Generally to claim the casualty loss, the victim can claim it on their 2021 tax return, or the loss can be claimed on the 2020 tax return. If you have already filed your return, you can file an amended return to claim the loss.
In order to decide whether to claim the loss for the 2020 or 2021 tax year, consulting with your tax consultant is advisable.
If your prior-year tax returns have been destroyed in the fires, California's Franchise Tax Board can provide you with a free copy of your previously filed returns. Additionally, you can also get a free copy of your IRS tax transcript using the IRS’s Get Transcript tool.
Millionacres bottom line
When disaster strikes, it hits hard. Thankfully the IRS has offered the victims of the California wildfires some tax relief. If you are a victim of these devastating fires, take advantage of the filing extension and the casualty and theft loss. If you need assistance with your tax returns, consult with your tax advisor to help ease the burden.