Tax relief for natural disasters
Natural disasters are certain unexpected events brought about by forces of nature that can lead to the destruction of properties, damage of structures, and loss of lives.
Natural disasters usually lead to severe damage to the environment, damage to businesses, loss of human lives, and financial loss that individuals involved in natural disasters might need a while to recover from before falling back to the normal routine of living.
Some natural disasters on which tax relief can be given include earthquakes, flooding, volcanic eruption, hurricanes, tornadoes, storms, wildfires, drought, landslides, and snowstorms.
Definitely, tax payment or filing of tax returns will not be the first priority of an individual affected by a natural disaster. After the need for survival, the individual will be preoccupied with the need to recover financially and emotionally from some losses caused by the natural disaster before the thought of their tax obligations can be prioritized. Therefore, due to this understanding, the government made provisions available to provide tax relief to affected taxpayers in disaster situations.
This tax relief provided by the government through the Internal Revenue Service will cover for individuals and businesses located in major disaster areas and affected by a natural disaster as the word is defined in the IRS tax code.
What kind of tax relief is made available to victims of natural disasters?
There are two major tax relief systems made available to individuals or businesses resident in locations affected by natural disasters. They are:
- The IRS can push back the deadline for the filing of tax returns for individuals and businesses in areas affected by natural disasters and also extend the deadline for the payment of tax for those individuals and businesses. Normally there is an approved tax date for individuals and business owners and not meeting up with the deadlines will naturally attract tax penalties.
However, due to the various damages and disorganizations usually caused by natural disasters, most individuals and businesses will be unable to meet up with the normal deadline of filing of tax returns and payment of tax due to various reasons which might include loss of business records, loss of important documents, payroll information, former tax returns, etc. Due to all these considerations, the IRS usually pushes back the deadline of filing tax returns and paying of tax to those affected as a provision for tax relief.
It has also been discovered that despite the lack of physical presence of some individuals or businesses in the disaster-affected region, they can still be affected and be eligible for tax relief.
For example, if the tax agency that handles their taxes is in the affected region or if some of their important tax documents have been misplaced in that region due to one reason or another, then taxpayers and businesses resident in the disaster region will automatically receive an extension on tax returns filing and tax payments but other individuals not resident in the area but affected by the disaster might need to call the IRS to file a complaint and to request for an extension of filing and a new payment deadline.
- Depending on the loss recorded by individuals and businesses resident in the disaster region, the IRS can allow for claims of tax deductions. The tax deductions allowed by the IRS can be either full loss deductions or partial loss deductions on business properties if the loss was caused by the natural disaster. Due to this, carrybacks can be filed to receive tax refunds from previously paid taxes to help recover from losses incurred by the natural disaster.
Thanks to the tax relief provided by the government, many individuals and businesses can have a reason to smile amidst a terrible situation. However, it will still take years for affected individuals and businesses to recover fully from the effect of these natural disasters.
The considerate act of the government to relieve affected individuals is necessary because these individuals and businesses need all the help they can get in order to recover in the occurence of a natural disaster. People affected by natural disasters need to be informed of tax relief and benefits available to them in order to save them thousands of dollars in money that they need for survival.
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