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As homeowners view the devastation from the Eaton and Pacific Palisades fires in Southern California, it is a good opportunity to review your preparations in case of a natural disaster. Many homeowners had a short amount of time to gather family pictures, important papers and clothing before they evacuated. Some were forced to abandon cars on clogged roads and flee on foot.
The Internal Revenue Service (IRS) reminds taxpayers that the season for natural disasters is approaching. The springtime can bring floods while summer is known for tornadoes and windstorms. In the fall season, there is a higher risk for fires and hurricanes.
With the substantial risk of floods, fires, tornadoes, windstorms, hurricanes and other natural disasters, it is important for all Americans to take protective steps. These steps could include securing and duplicating essential documents, creating documentation of collections and other valuable properties and understanding how to find assistance. By preparing ahead, taxpayers will be able to recover financially from a natural disaster faster with proper documentation.
1. Secure Your Documents — You should keep your important documents in waterproof containers and in a secure location. Important items include your tax returns, birth certificates, deeds to your home and other property, insurance policies and similar documents. Some individuals choose to have a copy of these documents held by a relative or friend in a different state.
2. Copies of Documents — Some of your documents are available only on paper, so you may wish to scan them into a digital file format. Once they are scanned, you have the option of transferring the documents to a commercial cloud-based storage system for additional security.
3. Inventory of Valuables — Taxpayers should have a detailed inventory of valuable property. You may take photos or videos of collections, art, jewelry or other valuable items. It is also helpful to have a general description of your property, which may include the make and model numbers of some items.
4. How to Get Help — If you are the victim of a natural disaster, it is important to understand how to obtain assistance. You will want to contact your insurance agent to report the loss. Some financial institutions can provide statements and electronic documents that may assist you in rebuilding your financial affairs. The IRS.gov site has a helpful page called "Reconstructing records after a natural disaster or casualty loss."
5. IRS Assistance — The IRS provides assistance after a federal disaster has been declared. The IRS “Tax relief in disaster situations” webpage may be helpful. In many cases, the IRS delays filing or tax payment dates. The date will be specific for your affected area, so check visit IRS.gov for details. There also is an IRS disaster hotline at 866-562-5227.
6. Disaster Loss Deduction — If you have a substantial loss, you may qualify for a disaster loss deduction. The uninsured or unreimbursed disaster loss may be deductible. Check out the rules set forth in IRS Publication 547, Casualties, Disasters, and Thefts.
Everyone should prepare and be ready for natural disasters. It is important to develop an evacuation plan and set aside essential items before a storm or other disaster threatens your life and property.
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