Don’t Let Taxes Rain on Your Parade: A Guide to Preparing for Natural Disasters
Source: IR-2023-100, May 10, 2023
What’s worse than a hurricane, a wildfire, and a tornado combined? Having to deal with the IRS in the aftermath of such calamities! Fear not, dear taxpayers. In honor of both National Hurricane Preparedness Week and National Wildfire Awareness Month, our friends at the IRS are offering some hot tips to keep your financial and tax records safe and dry.
Now, if you’ve been keeping tabs on 2023, you’ll know that FEMA has already been busier than a squirrel in an acorn factory, dealing with mudslides, landslides, storms, and more. These disasters can cause headaches bigger than a Sunday morning after a wild Saturday night out. So, it’s essential to prepare year-round. Think of Hurricane Preparedness Week and Wildfire Awareness Month as the perfect time for your annual financial spring cleaning.
To help you out, we’ve got some top-notch advice to keep your personal financial and tax information as secure as a treasure chest in a pirate’s hideaway. For more details, you can swing by Ready.gov or IRS.gov.
1. Safeguarding Your Documents:
Think of your tax returns, Social Security cards, birth certificates, and deeds as your personal Infinity Stones. Keep them in a waterproof container in a safe spot. And while you’re at it, make copies and store them somewhere else, like a safe deposit box or with a trusted friend who lives far away. You can also scan these documents and keep them on a flash drive. This way, you’ll always have them at your fingertips, no matter what Mother Nature throws at you.
2. Keeping Record of Your Valuables:
You’ve worked hard to acquire your treasures, so let’s make sure you can prove they’re yours. Snap some photos or take videos of all your property, especially high-value items. These records can help you claim insurance or tax benefits after a disaster. The IRS has even made workbooks (Publication 584 and 584-B) to help you list down your personal belongings and business equipment. It’s like a shopping list, but in reverse!
3. Reconstructing Records:
If a disaster has been as thorough as a hungry dog at a barbecue, you might need to rebuild or replace your records for tax purposes, federal assistance, or insurance reimbursement. The more accurately you estimate your loss, the more aid could be available. The IRS’s Reconstructing Records webpage is an excellent place to start.
4. Checking Fiduciary Bonds:
For those of you using payroll service providers, it’s worth checking if they have a fiduciary bond that could protect you in case they default. The IRS reminds you to choose your payroll service providers as carefully as picking a ripe avocado at the grocery store.
5. IRS Disaster Relief:
After a major disaster, the IRS can provide tax relief. If FEMA declares a disaster in your area, the IRS may postpone certain tax filing and payment deadlines. No need to call them up — they’ll automatically apply this relief if you’re in the affected area. However, if you’re affected by a disaster but not in a designated area, give them a ring at 866-562-5227 to explore your options.
***Disclaimer: This communication is not intended as tax advice, and no tax accountant -client relationship results**