"I'm from the government and I'm here to help you" may be regarded by some to be the most terrifying words in the English language, but not so when you are dealing with a disaster. Once the federal government has declared your location to be a major disaster zone, there are plenty of assistance programs--but to qualify for federal loans and grants, you must have filed a return for the most recently completed tax year. That can be a big problem if you lost important records when the disaster struck that are necessary to complete your return.
"If you haven't filed because you've lost information in a disaster, IRS will help you recover information and may grant you additional time to file taxes," said Alice Linville, EA, an enrolled agent with Triad Tax Service in High Point, NC. "In 2010, taxpayers in disaster zones in many states, including Massachusetts, Tennessee, West Virginia, Oklahoma, Connecticut, Mississippi, Alabama and Kentucky, received special grants of relief, such as extra time to file and an option to claim disaster-related casualty losses on their federal income tax returns for either this year or last year. If you're filing an amended return claiming losses related to the disaster for the previous year, you may also get your refund faster."
Casualty or theft losses that result from a disaster can be claimed regardless of the taxpayer's adjusted gross income, but any insurance reimbursement must be deducted from the amount claimed. In this situation, both personal use property and business property may be claimed, but the tax rules pertaining to losses incurred in a federally declared disaster are complicated, leading many affected taxpayers to hire a licensed tax specialist to fully take advantage of IRS tax assistance provisions.
If you've been financially affected by a disaster and decide to retain professional tax assistance, consult an enrolled agent. Enrolled agents are the only tax practitioners who are licensed by the U.S. Department of the Treasury to represent taxpayers before the IRS. EAs provide tax preparation, tax advice, and tax planning services as well as help taxpayers resolve problems with the IRS. To find an enrolled agent in your area, visit the National Association of Enrolled Agents website at www.naea.org and click on "Find an Enrolled Agent."
Contributed by the National Association of Enrolled Agents (NAEA)
NAEA is the professional society that supports its nearly 12,000 members with resources, education and networking and by representing their interests to government, business and the general public. Find out more about NAEA and becoming an enrolled agent at www.naea.org.