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Thursday, September 8, 2011

Wet and Wild or How I Spent My Summer Vacation

Extended Filing & Payment Dates

If Tropical Storm Irene hit you hard and you live in Massachusetts, be aware that you may qualify for tax relief from the IRS. I realize it's odd to see the word "relief" in the same sentence with "IRS" but President Obama has declared both Berkshire and Franklin counties as federal disaster areas. If you live or have a business in either of those counties, you may qualify for tax relief.

The declaration permits the IRS to postpone deadlines for those taxpayers who qualify. Corporations and other businesses that previously obtained an extension until September 15 to file their 2010 returns, and individuals and businesses who filed for a similar extension until October 17 now have until October 31, 2011. It also includes the estimated tax payment for the third quarter, which is normally due on September 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits that were due from  August 27 through September 12, as long as the deposits are made by September 12, 2011.

If you qualify for these extended dates and receive a penalty notice from the IRS, call the phone number on the notice to have the IRS abate the interest and any late filing or late payment penalties. Be aware that the penalties or interest will be abated only if you have an original or extended filing, and payment due date, that falls within this postponement period.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year (2011) or last year (2010). Claiming the loss on your 2010 return will get you a refund for the loss earlier, but waiting to claim the loss on your 2011 return could provide for a greater tax saving, depending on other income factors.You can only deduct personal property losses that are not covered by insurance or other reimbursements.

If you are claiming the disaster loss on your 2010 return, you should put the Disaster Designation “Massachusetts/Tropical Storm Irene” at the top of the form so that the IRS can expedite the processing of the refund.

For more details, see Form 4684 and instructions.  You can also call the IRS disaster hotline at 1-866-562-5227 to request this tax relief and get additional information.

Taxpayers in New Hampshire, Vermont, Connecticut, North Carolina, New Jersey, New York State, and Puerto Rico should go to for information specific to your state. You can also find information regarding tax relief for disasters occurring earlier this year in Kentucky, South Dakota, Missouri, Nebraska and Montana.

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Disclaimer: Tax advice contained herein was not written to be used and cannot be used to avoid payment of taxes or to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. All information provided is for illustrative purposes only. You should contact an accountant, tax preparer or tax attorney for advice or information specific to your situation. This information is not to be used as a directive.

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