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In the aftermath of Hurricane Harvey, the IRS announced extended deadlines to affected   taxpayers.

The IRS Extends Deadlines for Hurricane Harvey-Affected Taxpayers

Once the immediate aftermath of Hurricane Harvey passes, many taxpayers will be left with questions as to how their tax situations will be impacted. Taxpayers will need to determine the timing of when their tax returns and tax payments (if applicable) are due, the deductibility of hurricane-related expenses, and the inclusion of relief payments in taxable income.

Extensions

In the aftermath of Hurricane Harvey, the IRS announced extended deadlines to affected taxpayers.

The following extensions will automatically apply to taxpayers having IRS addresses of record in FEMA designated areas qualifying for individual assistance. An up-to-date list can be found here.  Additionally, other affected taxpayers who (a) live outside the designated disaster areas, but have records necessary to meet the deadline located in the disaster area or (b) are assisting in the relief efforts and are affiliated with recognized government or philanthropic organizations may contact the IRS at 1-866-562-5227 to discuss their individual situations. The extended deadlines announced in Announcement 2017-135 include:

Required filing Original due date Extended due date
Extended individual returns for tax year 20161 October 16, 2017  January 31, 2018
Third quarter estimated payment for tax year 2017  September 15, 2017  January 31, 2018
Fourth quarter estimated payment for tax year 2017  January 16, 2018  January 31, 2018
 Payroll and excise tax returns   October 31, 2017 January 31, 2018
Deposit payments for federal payroll and excise tax August 23, 2017 – September 6, 2017  September 7, 2017

 

Deductions

Taxpayers are reminded to keep records of unreimbursed and uninsured repair costs sustained as a result of the hurricane damage. These expenses are casualty losses that may be claimed either in the year the loss occurred (2017) or the prior year (2016). Casualty losses are reduced by reimbursement including insurance proceeds and money received from an employer’s emergency disaster fund. Casualty losses are not reduced by excludable cash gifts, so long as there were no conditions limiting the use of the gift. In the case of displacement from a home located in the FEMA designated disaster areas, insurance payments for living expenses do not reduce the casualty loss.

Income Inclusion

Qualified disaster relief payments are not includible in taxable income. These payments include funds received, from any source, for:

  • Reasonable and necessary personal expenses incurred as a result of the hurricane,
  • Reasonable and necessary expenses incurred for the repair and rehabilitation of a rented or owned personal residence due to the hurricane, and
  • Reasonable and necessary expenses incurred for the repair or replacement of the contents of a personal residence as a result of the hurricane.

Qualified disaster relief payments do not include payments representing insurance reimbursements or income replacement payments for lost wages, lost business income, or unemployment compensation.

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1 While the filing of the extended tax return for 2016 is extended, the payment of taxes was due on April 17, 2018, and is therefore not extended.

Kristen De Noia is a Tax Manager with tax compliance and planning experience focusing on personal and fiduciary income taxation, gift taxation and trusts and estates including high net worth families and closely held business owners.

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