Hurricane Sandy Tax Relief

Dealing with Hurricane Sandy’s destruction is a little easier with these tax breaks from the IRS

No amount of help will make recovering from the damage Hurricane Sandy inflicted on the Northeast easy, but tax breaks could help ease the pain. Thankfully, the IRS has taken many measures to provide tax relief to Hurricane Sandy victims.

Deadlines pushed back

For taxpayers in Connecticut, New Jersey, and New York who were affected by the storm, the IRS has pushed back multiple tax deadlines to February 1, 2013. This new deadline applies to

• fourth quarter individual estimated tax payments normally due January 15
• payroll and excise tax returns and their accompanying payments for the third and fourth quarters, normally due October 31 and January 31
• Form 990 series returns for tax-exempt organizations with original/extended due dates during this period

Not only are deadlines pushed back, but the IRS will also abate all interest, late-payment penalties, and late-filing penalties for taxpayers located in the disaster zone.

Even some taxpayers outside the disaster zone may qualify for this relief, especially if

• your books, records, or tax professional are located in the disaster zone
• you are assisting a government agency or philanthropic organization with disaster relief

You will not receive IRS assistance automatically, however. You must call them at 866-562-5227 to see if you qualify.

Some of the states affected are also pushing back the tax deadlines for state taxes. New York, for example, is postponing tax deadlines that fall after October 26 until November 14.

Casualty losses

Many hurricane victims whose houses were destroyed or damaged by the hurricane will be able to reduce their tax burden by deducting a casualty loss – the amount the fair market value of their property decreased as a result of the storm.

According to the IRS, “a casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.” This includes Hurricane Sandy itself as well as any fires, floods, shipwrecks, or vandalism that may have resulted.

You can measure the extent of the loss by the repairs you have to do, but be aware that repairs can potentially increase the value of your home.

You can either wait to claim your casualty loss deduction on your 2012 taxes – which you can file starting January 22, 2013 – or you can amend your 2011 taxes to claim the casualty loss deduction for that year. Doing so would get you your refund a few months sooner.

Volunteers

Volunteers too can get a tax break for some of the work they do in support of the hurricane’s victims. Volunteers can deduct

• travel expenses to and from the location where they were volunteering (driving will net you 14 cents per mile as well as un-reimbursed parking fees and tolls)
• phone calls and postage stamps
• “reasonable payments” for meals and hotels when traveling on behalf of the charity

If you plan on deducting more than $250, it’s best to get a receipt from the charity.

Surely as storm victims begin to rebuild their lives, they will want to take advantage of many of these valuable tax breaks, especially when it comes time to file a 2012 return.

Photo via That Hartford Guy on Flickr.

This entry was posted on Wednesday, November 7th, 2012 at 4:53 pm and is filed under Tax News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.