As recovery efforts are underway for victims of the devastating wildfires in Hawaii, the Internal Revenue Service is moving to give survivors one less thing to worry about.
The agency has launched its tax relief package for victims in Maui and Hawaii counties that basically delays an array of federal individual and business tax deadlines until February 15, 2024.
Relief is available to any taxpayer who lived or operated a business within the federal disaster declaration issued by the Federal Emergency Management Agency (FEMA). A list of towns and other localities currently included is available on the disaster relief page of the IRS.gov website.
Wildfire Victims Have Until February 15 to file 2022 Returns and Pay Tax Due.
The postponement period covers a wide range of filing and payment deadlines that would otherwise have occurred between August 8 of this year and the new deadline of February 15, 2024.
The new 2024 deadline includes:
- Taxpayers with a valid extension that is due to expire on Oct. 16, 2023. It should be noted, however, that since payments for 2022 tax due were required before the wildfire event, those payments aren’t covered by the new 2024 deadline.
- Quarterly estimated income tax payments normally due on Sept. 15, 2023, and Jan 16, 2024.
- Quarterly payroll and excise tax tax returns that otherwise would have been due on Oct. 31, 2023, and Jan. 31, 2024.
- Calendar-year partnerships and S corporations with 2022 extensions due to expire Sept. 15.
- Calendar-year partnerships with 2022 extensions due to expire on Oct. 16.
- Calendar-year tax-exempt organizations with extensions expiring on Nov. 15.
- Business taxpayers should remember that penalties for failure to make required payroll and excise tax deposits between Aug. 8 and Sept. 7 are abated, as long as deposits are made by Sept. 7.
Complete details are available on other returns and payments on the Disaster Assistance and Emergency Relief for Individuals and Businesses page on the IRS website.
Relief Package Also Covers Others Affected by the Disaster.
What about others who are affected by the fires, but aren’t residents of the disaster area? Consider the case of a taxpayer who lives outside the disaster area but lost the records necessary to meet a tax deadline in the disaster. These victims should call the IRS at 866-562-5227 to find out what relief the agency may have available for them.
Conversely, taxpayers who live within the federal disaster area do not need to call the IRS in order to qualify for the tax relief package. The IRS says benefits are tied to the taxpayer’s address of record on file with the agency, and so are enabled automatically when their returns are received.
In some cases, taxpayers may not have an address of record on file with the agency, because, for example, they may have moved into the disaster area after they filed their return. Due to circumstances, these taxpayers could find a late-filing or late-payment notice in their mailbox. These taxpayers should call the phone number stated on their printed notice letter to get the penalty abated, per the IRS.
Filing After the Fire Explained.
When it comes down to how to claim their losses on a tax return, it is the taxpayer’s choice.
Individual and business taxpayers within the federal disaster area can claim their uninsured or unreimbursed losses from the disaster in one of two ways. The loss can be claimed on the return for the year the loss occurred (in this case, on the 2023 return, normally filed in 2024) or on the return for the prior year, which would be 2022.
Any return claiming a disaster loss should have the FEMA declaration number, DR-4724-HI, displayed on the return. For more details on claiming a loss, check out Publication 547.
In general, qualified disaster relief payments are excluded from gross income. This usually means money received from a government agency for reasonable and necessary expenses, whether personal, family, living or funeral expenses, for repair or rehabilitation of a home, or for repair or replacement of a home’s contents.
More information on disaster payments is available in IRS Publication 525 on the IRS website.
Source: IRS: Hawaii wildfire victims qualify for tax relief; Oct. 16 deadline, other dates postponed to Feb. 15
Trussell Tax