Hurricanes Harvey and Irma decimated the Caribbean and the southern United States, creating tremendous damage to businesses and much economic uncertainty. Because of these devastating storms, the IRS is providing tax relief to victims – including small business owners.
Unfortunately, these disasters also occurred during the extended tax filing season. Taxpayers affected by the storms and located in the disaster area now have until January 31, 2017, to file tax returns and pay taxes due.
Who is eligible for tax relief?
Individuals and small business owners are eligible for tax relief in any area designated by the Federal Emergency Management Agency. Additionally, taxpayers who live or operate businesses in parts of Florida, Puerto Rico and the U.S. Virgin Islands may also be eligible. The IRS may add other localities at a future date.
To confirm eligibility, search the current list of eligible localities on the Disaster Relief page of IRS.gov.
Tax relief for Individual Taxpayers
Individual tax filers who have tax returns due between September 15 and October 16 (including tax extensions) have until January 31to file their tax returns and make payments. The tax relief extension also includes individuals who are required to make quarterly estimated tax payments on September 15and January 16.
Who are considered Individual Tax Filers?
Individual tax filers include those who operate a business as a sole proprietor or single member LLC and file Form Schedule C (Profit or Loss from Business) with their personal income tax returns.
Tax relief for Small Business Owners
Calendar year small businesses who file tax returns as an LLC, Partnership, S-Corporation or C-Corporation due on September 15 or October 1 are eligible and have until January 3to file returns.
The IRS is also providing additional relief for several other business tax deadlines, including the October 31 deadline for quarterly payroll and excise tax returns.
Additional relief for Business Owners
The IRS is waiving the late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster period. Check out the disaster relief page on IRS.gov for specific information to your circumstances.
The IRS will generally work with any individual or business owner who lives outside the FEMA designated disaster area but whose necessary records are located within the disaster area. Tax relief is automatic but if you receive an IRS notice for late filing or late payment, call the number on the notice (or contact your CPA, Enrolled Agent or tax professional) to discuss the options to get the penalties waived.
Claiming Losses from Hurricanes Harvey and Irma
Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can either claim the loss on the 2016 income tax returns or on the 2017 income tax returns. Make sure you speak with your CPA, Enrolled Agent or tax professional as everyone’s circumstances may be different. Refer to IRS Publication 547 for more details.
Remember: You have automatic tax relief for hurricane disasters if your location is eligible so there is no need to contact the IRS for additional information unless you receive an IRS notice.
About Ebong Eka
Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.
Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan."
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