California has been in for nasty weather this year, having been hit since January with an onslaught of storms that have resulted in floods, mudslides, and evacuations. As Californians struggle to recover, there is a silver lining: the IRS has announced that affected taxpayers will have until October 16, 2023, to file various individual and business tax returns and make tax payments. This extension is in response to the disaster declaration issued by the Federal Emergency Management Agency (FEMA).
Federal Disasters and Taxes
Taxpayers who live in areas that have been declared disaster areas by FEMA are automatically granted extensions of time to file returns and pay taxes.
Extensions also apply to taxpayers whose tax preparers are in disaster zones and unable to file their returns for them even if the taxpayer is not in an affected area. Similarly, taxpayers who own interest in a partnership or are shareholders of an S corporation that is unable to provide Schedule Ks are also eligible for filing and payment extensions.
The IRS has granted extensions to October 16, 2023, for several tax-filing and tax-payment deadlines for taxpayers living in affected areas. These include:
- 2022 individual income tax returns, originally due on April 18, 2023
- Various 2022 business returns, originally due on March 15 and April 18, 2023
- Farmers who forgo estimated tax payments and typically file their returns by March 1
- Quarterly estimated tax payments, originally due on January 17 and April 18, 2023
- Quarterly payroll and excise tax returns, originally due on January 31, 2023
- Furthermore, taxpayers can make 2022 contributions to their Individual Retirement Accounts (IRAs) and Health Savings Accounts (HSAs) until October 16, 2023
Areas Eligible for Tax Relief
Tax relief is available to individuals and businesses located in the following California counties: Alameda, Colusa, Contra Costa, El Dorado, Fresno, Glenn, Humboldt, Kings, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Tulare, Ventura, Yolo, and Yuba.
Abatement of Penalties
Penalties for late filing or late payment that fall within the postponement period will be waived for affected taxpayers. To request penalty abatement, taxpayers should call the telephone number provided on the IRS notice they receive.
Requesting Tax Relief
The IRS will automatically identify eligible taxpayers within the covered disaster area and apply the appropriate filing and payment relief. However, those located outside the disaster area who are still affected can call the IRS disaster hotline at 866-562-5227 to request relief.
Casualty Loss Claims
Taxpayers impacted by the disaster can claim disaster-related casualty losses on their federal income tax return for either the year the event occurred or the prior year. They should use Form 4684, Casualties and Thefts, and include the disaster designation “California, Severe Winter Storms, Flooding, and Mudslides” in bold letters at the top of the form, along with the FEMA disaster declaration number FEMA-3591-EM.
The IRS will also waive fees for copies of previously filed tax returns for affected taxpayers. To request copies, taxpayers should submit Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, with the disaster designation in bold letters at the top of the form.
Taxpayers contacted by the IRS for collection or examination matters should inform the agency about the impact of the disaster on their situation for appropriate consideration. Forms and publications can be downloaded from the official IRS website, IRS.gov.
Tonneson + Co Can Help
Taxpayers impacted by the 2022-23 winter storms can benefit from tax relief measures, including extended deadlines and provisions for claiming disaster-related losses. A qualified CPA can help ensure that you are aware of all your rights and obligation and that your paperwork is filed appropriately. If you or your business have been affected by the storms in California, please contact Tonneson today.
Contact us at Tonneson + Co today to learn how we can help.
If you’re interested in working with Tonneson + Co, please reach out to us. We look forward to hearing from you!