Tornado, hurricane, fire … Disasters can happen at any time, and the Internal Revenue Service is encouraging taxpayers to be prepared for the unexpected.
Over the last 18 months, the IRS responded to presidentially declared disasters in 15 states and U.S. territories. It said it offered tax relief and assistance to victims of hurricanes, typhoons, earthquakes, volcanos, fires, tornadoes, severe storms, high winds and floods, according to a release.
The 2019 hurricane season begins in June and the IRS joins the National Weather Service during Hurricane Preparedness Week, May 5-11, by encouraging everyone to update or make an emergency plan, it said in the release.
Update emergency plans annually
Because a disaster can occur any time, and anyplace, it’s important plans be current. Individual and family emergency plans should be reviewed annually. They need to be updated when changes occur, such as change in marital status, size of the family or relocation. When a company or organization hires new employees or changes functions, it should also update emergency plans and inform its employees.
Backup key documents
Taxpayers can help themselves recover from a disaster by keeping key documents in a safe place. These might include bank statements, tax returns and insurance policies stored securely in a waterproof container. Have a duplicate set of key documents stored safely away from the originals.
Many financial institutions provide statements and documents electronically, making retrieval of said information easier. Original paper documents can be scanned and downloaded to an external hard drive, flash drive, CD or DVD, the IRS said in the release.
A picture can be worth a thousand words, especially those that document the contents of a home or business before and after a disaster. Photographs can help prove the fair market value of property when filing insurance or casualty loss claims. Photos should be stored with backup files outside the area that may be affected by a disaster.
The IRS has disaster-loss workbooks that can help compile lists of personal belongings or business equipment. Images may fit on the same storage device as electronic documents.
For more information, see:
- Publication 584, Casualty, Disaster, and Theft Loss Workbook
- Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
IRS ready to help
When disaster strikes, the IRS can help. When there is a federally-declared disaster, a special IRS toll-free hotline at 866-562-5227 is open so affected taxpayers can speak with specialists trained to handle disaster-related tax issues.
Replacing lost key tax documents can be done by submitting Form 4506, Request for Copy of Tax Return. Alternatively, transcripts showing most line items on tax returns can be ordered through the Get Transcript link on IRS.gov, by calling 800-908-9946 or by using Form 4506-T-EZ, Short Form Request for Individual Tax Return Transcript, or Form 4506-T, Request for Transcript of Tax Return.
Beware of scams and fraud
After a disaster, criminals and scammers try to take advantage of the generosity of taxpayers who want to help victims. Fraudulent schemes normally start with unsolicited contact by telephone, social media, e-mail or in-person using a variety of tactics, the IRS warned.
- Some impersonate charities to get money or personal and financial information.
- Some create bogus websites similar to legitimate charities to trick people to send money or provide financial information.
- Others operate bogus charities and solicit money or financial information by telephone or email.
Limit on personal casualty and theft losses
Recent tax law changes limit losses that can be claimed on a federal tax return.
For more information, see:
- Publication 547, Casualties, Disasters, and Thefts (PDF)
- Publication 2194, Disaster Resource Guide for Individuals and Businesses (PDF)
- Publication 3833, Disaster Relief (Be Part of the Program) (PDF)
- Publication 5307, Tax Reform: Basics for Individuals and Families (PDF)