Many of our clients who live in the Southwest Florida region, as well as North and South Carolina, were affected by Hurricane Ian.
On Oct. 5, 2022, the IRS published IR-2022-173, which allows hurricane victims in those states an extension of time to file their 2021 income tax returns until Feb. 15, 2023. This meant that if a valid extension was granted for your individual tax return through until Oct. 17, 2022, you had until Feb. 15. The affected states have followed the same stance as well.
Please be advised that there was no relief for tax payments due for 2021 individual returns, as any payments should have been paid by April 15, 2022. The Feb. 15, 2023, extension also included quarterly payroll tax filings, as well as estimated income tax payments that became due.
In calculating any tax benefits related to property damage or loss related to storm damage, IRS Publication 547 indicates that taxpayers who have suffered a casualty loss must deduct casualty losses in the year incurred. However, if property was damaged due to a federally declared disaster, taxpayers may choose to deduct the loss on their return immediately preceding the year in which the disaster happened. Thankfully, Hurricane Ian was declared a federal natural disaster as of Oct. 1, 2022. Therefore, if you have not yet filed your 2021 individual income tax return, you can now claim the loss on the return. For those who have already filed, the loss will be claimed on the 2022 tax return.
Please be advised that the casualty loss cannot accurately be determined until insurance assessments have been completed by your insurance company. The challenge for many is that they are still waiting for their insurance companies to process and determine the amount of claim that will be reimbursed. Weather-related issues not only held up the filing of 2021 returns, but also caused many individuals and businesses to put the filing of their 2022 income tax returns on extension until Oct. 16, 2023.
The casualty loss deduction is determined differently depending on whether the property damaged was for personal or business use. This means that if only your primary or secondary home was damaged, your deduction will be calculated differently than someone who has a rental property or an operating business that was damaged. Any casualty loss suffered should be considered when going through 2022 tax preparation if the loss was not included with your 2021 return.
For more guidance regarding information, as well as documentation needed for properly calculating your casualty loss, please consult with your Zinner & Co. tax advisor.
Some state-specific relief programs are also available.
South Carolina Hurricane victims are eligible for a tax rebate up to $700. For those who have filed a tax return by Oct. 17, 2022, the rebate should have been received before Dec. 31, 2022. For taxpayers who need to file after Oct. 17, the rebate should have been issued in March of 2023. Rebates were issued via direct deposit or check, dependent upon the taxpayer’s 2021 tax filing.
Due to the multiple tornadoes and hurricanes that pummeled the State of Florida in 2022 and early 2023, the Internal Revenue Service also extended the due date for both filing and payment of any tax due for the 2022 tax year until Aug. 15, 2023. This extension also applies to the following
- Making IRA contributions for the 2022 tax year
- Payment of first and second quarter 2023 estimated tax payments
- Quarterly payroll and excise tax returns, including full abatement of late payment penalties as long as payments were made by April 27, 2023.
In addition to some specific state programs, the Small Business Administration also offers disaster loans which can apply to homeowners, renters, business owners, and certain non-profit organizations. Please consult your Zinner Tax Team member regarding possible eligibility for these loans.