More and more we are seeing federally declared disasters in the US. In 2022 18 states were granted tax relief provisions due to disasters. In 2021 it was 17 states. These disasters are occurring more frequently, and they can be emotionally and financially overwhelming for taxpayers. Often, the IRS and local tax authorities provide tax relief for taxpayers affected by disaster situations. Most of the time this relief will come in the form of additional time to file and pay taxes. Additionally, there can be the claim of losses on tax returns.

Navigating disaster situations as a tax preparer requires careful consideration and a proactive approach to help your clients. Here are some tips to assist tax preparers in dealing with disaster-related tax relief:

1. Stay Informed: Keep yourself updated about disaster situations in your area or in regions where your clients reside. Follow reliable news sources, official government announcements, and local authorities for accurate information.
2. Communicate with Clients: Reach out to your clients as soon as possible after a disaster strikes. Offer reassurance and inform them that you are available to help with any tax-related issues they may face as a result of the disaster.
3. Extend Deadlines: In the aftermath of a disaster, tax authorities may extend filing deadlines. Stay informed about any extensions granted by the IRS or local tax authorities and inform your clients about the new deadlines.
4. Know Disaster Relief Programs: Familiarize yourself with the tax relief programs available to those affected by disasters. These programs can include deductions, credits, and exemptions designed to alleviate some of the tax burdens for disaster victims.
5. Document Losses and Damages: Advise your clients to carefully document their financial losses and property damages resulting from the disaster. These records will be crucial for claiming relevant deductions or filing for disaster relief.
6. Provide Tax Planning: Help your clients assess their financial situation post-disaster. Provide guidance on how they can best utilize any insurance payouts, FEMA assistance, or other financial resources in a tax-efficient manner.
7. Understand Disaster-Related Tax Benefits: Be well-versed in the tax benefits available for disaster victims, such as casualty loss deductions, 401(k) hardship withdrawals, and tax-free grants received from disaster relief organizations.
8. File for Extensions if Needed: In severe disaster situations, it may be challenging for some clients to gather their tax documents and information in a timely manner. Check with the IRS and local tax authorities for automatic extensions or file for an extension on their behalf if necessary.
9. Offer Remote Services: If your office or the client’s location is inaccessible due to the disaster, be prepared to offer remote tax preparation services to ensure your clients can still fulfill their tax obligations.
10. Keep Client Information Secure: In times of crisis, scammers and identity thieves may take advantage of vulnerable individuals. Ensure your clients’ personal and financial information is kept secure and never share sensitive data through unsecured channels.

Remember that each disaster situation is unique, and the impact on your clients’ taxes may vary. It is crucial to approach each case with empathy, sensitivity, and a willingness to adapt to the evolving circumstances. If you encounter complex tax scenarios beyond your expertise, consider consulting with a disaster tax specialist or other professionals to provide the best possible assistance to your clients.

Finally, be prepared. Both personally and professionally. If your clients are dealing with a disaster, chances are you are too. Make sure you have your own plan in place for this scenario so you can be prepared to dedicate as much time as possible towards assisting your clients.

Helpful Resources

• List of All Declared Disasters
• Current Disasters
• Tax Relief in Disaster Situations – IRS Article
• Additional Assistance Links:
  • Individual Assistance
  • Disaster Assistance
  • Disaster Relief
  • Financial Assistance