Over the past week, Hurricane Ida has ravaged many states in our nation. While the hurricane has since been downgraded to a tropical storm, it blazed through and left a devastating path of destruction first -- from the flooding of New York's subways to the widespread power outages in New Orleans and Mississippi. People have lost their homes, and even worse, people have lost their lives.
To help aid in the recovery process, the IRS announced on Aug. 31, 2021, that it will provide relief for the victims (affected taxpayers), including individuals and households who reside or own businesses within any area FEMA has designated a disaster. At present, this comprises the state of Louisiana, but the IRS will offer the same filing relief to additional areas FEMA determines have been impacted by Hurricane Ida.
To learn whether FEMA has declared your area a disaster, you can use FEMA's disaster search tool.
Extension of time to file
Of the many types of relief the IRS is offering to affected taxpayers is an extension to file various types of business and individual tax returns. The victims of Hurricane Ida now have the following extensions:
- Individuals who filed an extension due to end on Oct. 15, 2021, now have until Jan. 3, 2022, to file their return.
- The estimated quarterly payment due Sept. 15, 2021, is now due Jan. 3, 2022.
- The quarterly payroll and excise taxes due Nov. 1, 2021, are now due Jan. 3, 2022.
- Penalty deposits due between Aug. 26, 2021, and Sept. 10, 2021, will be abated as long as the taxpayer makes the deposit by Sept. 10, 2021.
- The filing of Form 5500 series returns has been extended to Jan. 2, 2022.
Affected taxpayers who plan to use their time extension to file a 2020 return should write "Louisiana -- Hurricane Ida" on the top of the return. In addition to filling for assistance, taxpayers may be able to claim a casualty loss.
Casualty loss deduction
Affected taxpayers may also be able to deduct any partial loss of personal and/or business property that can be attributed to the disaster as a casualty loss. For the purpose of this provision, a casualty loss is a type of tax loss that results from a sudden, unexpected, or unusual event such as Hurricane Ida. There are three types of casualty loss relief:
- Federal casualty losses.
- Disaster losses.
- Qualified disaster losses.
All three types of relief refer to a federally declared disaster, but each has a different set of requirements. For this reason, affected taxpayers should work with a tax advisor to claim this deduction.
IRS Taxpayer Assistance Centers
Individuals impacted by the disaster may also be able to get in-person assistance from a local IRS office.
The Millionacres bottom line
Hurricane Ida was the fifth-strongest storm to make landfall in America's history, and it hit many states in our nation hard. The devastating impact may be felt for years to come. While this may be true, affected taxpayers are not alone
The IRS, along with many other federal and local agencies, is offering relief to victims of this terrible storm. If you have been impacted, work with your tax advisor to take advantage of the filing extension and casualty loss deduction.