Tax Relief for Disaster Situations

When disasters happen, taxpayers often have access to certain kinds of tax relief. On the federal level, taxpayers have access to certain types of tax relief if the event is a declared disaster.

What is a “declared disaster?”

A declared disaster is an event that causes enough damage that a state requires federal aid.

How is an event declared as a major disaster?

Once the event takes place, the state affected assesses the damage and determines if there are enough resources to respond. If not, the state determines what kind of federal assistance is needed, and submits a request to the President of the United States. If the president agrees, they declare the event a major disaster, and federal aid is sent.

To determine who qualifies for aid, disaster areas are designated, typically by county. Any individuals who live or runs a business in a disaster area qualify for relief and are referred to as affected taxpayers.

Taxpayers are also considered “affected” if records necessary to meet a filing or payment deadline postponed during the relief period are located in a covered disaster area.

What sort of tax relief can I get during or after a declared disaster?

Tax relief includes automatic filing deadline extensions for individuals and businesses, deferred penalties, deferred taxes, deductions for disaster-related losses, and more. The type of aid will depend on the type of disaster and the ways it has affected the community.