Tax Facts
IRS grants tax relief for Ivan victims
The Internal Revenue Service has announced special relief for taxpayers in the Presidential Disaster Areas of Florida, as well as Alabama, Louisiana and Mississippi – the four Gulf states struck by Hurricane Ivan. These disaster areas include 38 Florida counties; among them are the four counties West Florida Electric Cooperative serves -- Calhoun, Holmes, Jackson and Washington. Eligible taxpayers include individuals and businesses located in the disaster area, whose tax records are located in the disaster area and relief workers.
"Hurricane victims have more than enough concerns – taxes shouldn’t be among them," said IRS Commissioner Mark W. Everson. "We hope our relief provisions will help taxpayers in their financial recovery from this storm."
These taxpayers generally will have until Dec. 30 to file tax returns and submit tax payments. The IRS will abate interest and any late filing or late payment penalties that would apply. This relief applies to the Sept. 15 due date for estimated taxes and for calendar-year corporate returns with automatic extensions.
Extensions to file or pay taxes
The IRS gives affected taxpayers until the last day of the extension period to file most tax returns, including partnership and S-corporation returns, or to make tax payments, including those for estimated tax, that have either an original or extended due date falling within this period. The IRS will abate interest and any late filing or late payment penalties that would apply during these dates to returns or payments subject to these extensions.
The IRS also gives affected taxpayers until the last day of the extension period to perform certain other time-sensitive actions due to be performed during this period. This relief includes the filing of Form 5500 series returns.
This extension to file and pay does not apply to information returns in the W-2, 1098, 1099 or 5498 series, to Forms 1042-S or 8027 or to employment and excise tax deposits. However, the IRS may abate penalties on such deposits for affected taxpayers due to reasonable cause during the FTD penalty waiver period, provided they make the payment by the last day of that period. Taxpayers whose specific disaster-related circumstances prevent them from making tax deposits within that period may seek penalty abatements on a case-by-case basis.
To qualify for this relief, affected taxpayers should put the assigned Disaster Designation in red ink at the top of the return, except for Form 5500, on which filers should check Box D in Part 1 and attach a statement, following the form’s instructions. Individual or businesses located in the disaster area, or taxpayers outside the area who were directly affected by this disaster, should contact the IRS if they receive penalties for filing returns or paying taxes late.
Casualty losses
Affected taxpayers in a Presidential Disaster Area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer and earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.
Individuals may deduct personal property losses that are not covered by insurance or other reimbursements, but they must first subtract $100 for each casualty event and then subtract 10 percent of their adjusted gross income form their total casualty losses for the year. For details on calculating a casualty loss deduction, see IRS Publication 547, Casualties, Disasters and Thefts.
Eligible taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation in red ink at the top of the form so the IRS can expedite processing of the refund.
Other relief
The IRS will waive the usual fees and expedite requests for copies of previously-files tax returns for affected taxpayers who need them to apply for benefits or to file amended returns claiming casualty losses. Such taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, "Request for Copy of Tax Return," or Form 4506-T, "Request for Transcript of Tax Return," as appropriate, and submit it to the IRS.
Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so the IRS can provide appropriate consideration to their case.
For additional information, call 1-800-829-1040, toll-free, or log on to www.irs.gov.
More tax relief
A new federal law allows Floridians to deduct state sales tax on federal income tax returns. Benefitting residents of Florida and six other states without state personal income tax, the 2004 American Jobs Creation Act authorizes the sales tax relief as an added option for taxpayers itemizing deductions. This new law extends to Floridians the same tax benefit long enjoyed by residents of states hat tax personal income. For additional information, log on to www.myflorida.com.
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