In a span of just a few weeks, the U.S. and the Caribbean experienced three deadly and destructive hurricanes: Harvey, Irma and Maria. The South Bend and Houston areas of Texas, most of Florida, and many of the islands in the Caribbean have experienced massive loss from which it will take years and most likely trillions of dollars to fully recover.
For the individuals hit by the storms, this creates a significant financial burden on their lives, and if you already have money problems, the last thing you want or need is to finance the rebuilding of your life. The government and non-profit aid organizations are doing what they can to help ease the burden on victims. One area that you might find help: tax relief.
IRS Announces Tax Relief for Hurricane Victims
Already, the IRS has declared tax relief options for victims of the hurricanes. The IRS has named individuals and business living in or working out of a total of 47 counties in Texas affected by Harvey as eligible for tax relief, as of September 20. For victims of Irma, the IRS offered tax relief for everyone living or working in an area the FEMA designated as qualifying for assistance, which includes 67 counties in Florida as of September 15. Victims of Hurricane Maria in Puerto Rico and the U.S. Virgin Islands also have a similar tax relief option.
What Does the Tax Relief Include?
For this tax relief, taxpayers in this area have an extension on paying for and filing their taxes until January 31, 2018, for anything that was due between September 4, 2017, and January 31, 2018. This includes:
- Estimated income tax payments
- Estate and trust tax returns
- Individual returns
- Corporate and partnership returns
- S corporation returns
- Employment and certain excise tax returns
- Gift and generation-skipping transfer tax returns
- Form 5500 series
Certain exclusions apply, including information returns such as 1099 and W2 forms. Additionally, victims have the choice to claim their losses from the disaster on either this year, 2017, or the previous year, 2016.
Certain exclusions apply, including information returns such as 1099 and W2 forms. Additionally, victims have the choice to claim their losses from the disaster on either this year, 2017, or the previous year, 2016.
What does this mean? Well, it means that if you already filed your tax extension to October, you have extra time to file your return. However, you still should have paid the taxes by the April due date, even if you extended your filing due date. Therefore, this tax relief does not apply to any overdue taxes. Any individual or business that pays quarterly taxes might also have an extension. Certain quarterly business tax deadlines have also been extended.
Additional Help Might Be on the Way
There might be more assistance in the future. Congress is currently debating tax relief bills that might lift some of the current restrictions, including:
- Minimum of 10 percent loss in order to use the expenses as a deduction
- Lifting the charitable contribution limit for those who donate to hurricane relief
- Tax credit for employment relief
- Lifting the penalty for withdrawing retirement funds to pay for recovery from disasters
However, taxpayers should not rely on these changes yet. There are many challenges and hurdles expected for the bill to pass the House, and then it must go through the Senate and be signed into law by the President.
What About Current Tax Debt?
These tax relief benefits help victims with their 2016 and 2017 tax returns, but what about those struggling to pay off tax debt from previous years? It can be difficult to manage the extensive repair costs of rebuilding your home, buying essentials, moving to a new location, or missing work. On top of that, paying your overdue tax debt might not seem as important. However, you do not want it to go too long before you address your debt. Otherwise, it might only get worse.
You have options for negotiating your tax debt to make it more affordable, even in your current situation. It is possible to apply for an Installment Agreement to reduce your monthly payments. Or you can try to negotiate an Offer in Compromise. You might qualify for Penalty Abatement or one of the other tax debt settlement programs as well. Call us today at 877-372-2520 to discuss your options. Take care of it now before it gets worse. Then, you have one less thing to worry about as you rebuild your life after the destruction of these massive storms. Even if you were not a victim of the hurricanes, you might still qualify for one of the ongoing tax relief programs offered by the IRS.
