On May 1, 2024, the Internal Revenue Service (IRS) reminded taxpayers that soon it will be prime season for natural disasters. The National Wildfire Awareness Month is May and National Hurricane Preparedness Week starts May 5, 2024.
All individuals should use this time before the natural disaster season to protect your important tax and financial information. While major disasters normally occur during the summer months, the Federal Emergency Management Agency (FEMA) has already issued 25 Federal disaster declarations for winter storms, flooding, tornadoes, wildfires and landslides in 2024.
There are several helpful tips to protect your personal financial and tax information. Additional information is also available on IRS.gov or FEMA.gov.
- Protect Important Documents — Your original documents may include tax returns, Social Security cards, marriage certificates, birth certificates and deeds to real property. These should be secured in a waterproof and fireproof container in a safe location. You also may want to make copies of important documents and protect them in a safe deposit box or send them to a trusted person in a different secure location.
- Record of Valuables — With the ease of taking pictures or videos with the camera on your cell phone, you should have a record of your high-value items. These photos or videos will be important if you lose the items in a natural disaster. Your insurance company may be willing to pay a substantial value if you have a good record. Some insurance policies require items with high values to be specifically named in the policy prior to an incident. The IRS also offers Publication 584, Casualty, Disaster, and Theft Loss Workbook, which can be very helpful to you if you have a loss due to a natural disaster.
- Rebuild Your Records — After any disaster, you may have a challenge in reconstructing or rebuilding your records. These records could be essential for receiving a federal grant or an insurance company payment. If you can accurately estimate your loss through records, the insurance adjuster will be able to justify the payments. The IRS has a Reconstructing Records webpage on IRS.gov that may be helpful.
- Employer Fiduciary Bond — If you are an employer, you may have a problem with a payroll service provider. Your payroll service provider is obligated to make timely federal tax payments. There should be a fiduciary bond that protects you as an employer if your payroll service provider is in a natural disaster and defaults.
- IRS Tax Relief — If FEMA declares a federal disaster zone, the IRS frequently postpones tax filing and payment deadlines for individuals and businesses located in that geographic area. If you are within the disaster area, you will not need to contact the IRS. The IRS automatically identifies taxpayers with a business or personal address in the covered disaster area. If you reside outside the covered disaster area but have been impacted by the disaster, you may call 866-562-5227 to determine whether you qualify for relief.
Editor's Note: The summer months are a prime time for hurricanes, tornadoes and wildfires. This IRS guide is helpful to make sure you are prepared for a disaster. Many natural disasters occur without warning, so your preparations now may be essential for receiving a prompt government grant or insurance payment.
