For example, on April 16, two days before this year's deadline for filing income-tax returns, tornadoes and floods hit parts of North Carolina. Stricken counties were declared a federal disaster area. The IRS then gave taxpayers until June 30 to make their filings and payments. That included 2010 tax returns.
After a disaster declaration in parts of Illinois after April storms and flooding, business owners were given until June 30 to make payments. That includes their estimated tax payments due June 15.
The government also waived late-payment penalties for taxes including employment and excise taxes.
The extensions are automatically available if you live in a place that has been declared a disaster area. If you are outside a disaster area, you can still ask the IRS for a reprieve. You need to call the IRS disaster hotline at 1-866-562-5227 to make your request.
A business owner can also get an extension if the records needed to make a filing or payment are in a disaster area, even if the owner is not. That could happen if you had a warehouse with records miles away from your home or business.
Getting your refund money now, not next year: If you incur losses in a federally declared disaster, the IRS gives you the option of amending your previous year's return to claim a casualty loss, even though it happened this year.
That will get your refund money to you faster. And many taxpayers need that money now, not next April.
The IRS website, www.irs.gov, has a lot of information about casualty losses and taxes. You can download Publication 547, "Casualties, Disasters and Thefts." There is a second on disaster-area losses. The publication is included in the IRS's "Disaster Losses Kit for Businesses," which can be downloaded at www.irs.gov/pub/irs-pdf/p2194b.pdf
But first consider whether you'd be better off deducting your losses this year. If your business is still operating, and you expect this to be a profitable year, you might want to take the deduction for 2011 and offset your income with losses from the disaster. As with any other tax decision, consider all aspects of your business.
It is always a good idea to discuss your options with an accountant or tax lawyer, especially when your emotions may be running high.
If you do decide to amend your return, you will need to file a special form. Corporations will need Form 1120X, Amended U.S. Corporation Income Tax Return. Sole proprietors who file a Schedule C with their 1040s will need Form 1040X.
Check with your state: Your state likely has similar tax relief after a disaster.
