From tornados to tsunamis, ice storms to wildfires, natural disasters are found worldwide in an array of categories. Each comes with its own impact on you and your community, so staying informed about the different ways you can be supported is important. Even in the midst of a disaster that turns your world upside down, you still need to be on your toes about your life and finances.
Good news! The IRS provides many disaster tax relief funds, and assistance to eligible citizens. Tax relief is deemed accessible when a major natural disaster is declared in the location you reside. There are also a number of federal programs and funding for businesses, individuals, government agencies, and non-profit organizations to partake in when natural disasters occur. These additional resources are provided through FEMA (Federal Emergency Management Agency).
In the case that you or your business is impacted greatly by the disaster, you can claim that loss on your federal income tax return for the year the casualty occured or for the preceding year. The loss must, however, exceed ten percent of the adjusted gross income for the tax year by at least $100. If the loss is also deemed as a federally declared disaster, the taxpayer can choose which of the two tax years provides the better tax advantage.
Another advantageous tax consideration that can be made for taxpayers experiencing hardship, is an expedited tax refund from the IRS if they are in the federally declared disaster area. This benefit provides a quick source of funds, doesn’t need an individual assistance declaration, and doesn’t need to be repaid according to the FEMA disaster guidelines.
If you or someone you know has been impacted by a natural disaster this year, refer them to the IRS website for all current and updated information on Tax Relief in Disaster Situations around the U.S.