Natural disasters occur with increasing frequency due to a combination of factors, including the impact of climate change. In 2021, the United States experienced 20 separate billion-dollar weather and climate disasters, according to Climate.gov, placing it second for the most disasters in a calendar year behind the United States. record of 22 events in 2020.
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Dozens of smaller events also take place each year, making it increasingly important for people to prepare in advance. This includes protecting important financial documents such as tax records.
IRS Commissioner Chuck Rettig addressed the topic in a May 5 column on the agency’s website as part of National Wildfire Preparedness Month in May and Hurricane Preparedness Week. this week. The column outlines some of the things you can do to prepare for potential disasters from the perspective of protecting your tax and financial records, as well as learn more about the resources and tax provisions provided by the IRS to helping individuals and businesses affected by disaster.
In terms of disaster planning, Rettig recommends the following:
- Use paperless record keeping for all financial and tax records
- Document all your valuables and professional equipment
- Create or update your business continuity plans for businesses
- Update your disaster contingency plans
If you have ever been the victim of a natural disaster, you should familiarize yourself with special tax law provisions designed to help taxpayers and businesses recover financially from the impact, particularly when the federal government declares your location to be located in a disaster area.
Depending on the circumstances, the IRS may grant additional time to file your returns and pay your taxes. Individuals and businesses located in a federally declared disaster area can also get faster reimbursement by reporting disaster-related losses on the previous year’s tax return, usually by filing an amended return.
For more information, visit the IRS website Disaster assistance and emergency relief for individuals and businesses page on IRS.gov. It provides answers to frequently asked questions, the latest disaster tax relief guidelines, and local area-specific information such as tax provisions that affect certain states.
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Another useful resource is IRS Publication 3067: IRS Disaster Assistance – Federally Declared Disaster Areawhich provides information to individuals and businesses affected by a federally declared disaster and the assistance available to disaster victims.
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