As we approach the end of the 2018 hurricane season, I'm writing to make you aware of extensions available for filing returns and paying taxes as well as other tax relief measures from which you or your business may directly benefit. While most of Virginia was spared the worst damage from Hurricanes Florence and Michael, many of you may still benefit from the tax relief that is available.
What Areas Are Eligible for Hurricane Florence Relief?
The following Virginia counties have been designated by Federal Emergency Management Agency (FEMA) as qualifying for disaster relief as a result of Hurricane Florence: Charles City, Halifax, Henry, King and Queen, King William, Lancaster, Nelson, Patrick, Pittsylvania, and Russell Counties and the Independent Cities of Franklin, Newport News, Richmond, and Williamsburg. Portions of North Carolina and South Carolina also qualify for relief. Portions of Alabama, Florida and Georgia qualify for similar relief as a result of Hurricane Michael.
Extensions Available for Filing Tax Returns and Making Tax Payments
The IRS is granting individuals and businesses affected by Hurricane Florence automatic extensions of time to file tax forms and make tax payments. The tax relief postpones various tax filing and payment deadlines that occurred starting on September 7, 2018. Specifically, affected individuals and businesses have until January 31, 2019, to file returns and pay any taxes that were originally due during the period of September 7, 2018, through January 31, 2019. This includes quarterly estimated income tax payments due on September 17, 2018, and the quarterly payroll and excise tax returns normally due on October 31, 2018. The additional time also applies to various businesses including, among others, calendar-year partnerships whose 2017 extensions ran out on September 17, 2018. Taxpayers with a valid extension to October 15, 2018, to file their 2017 return also have more time to file.
Increased Casualty Loss Deductions
While the Tax Cuts and Jobs Act of 2017 generally limits the deduction for personal casualty losses for tax years 2018-2025 to only those deductions attributable to a federally declared disaster, Hurricane Florence is a federally declared disaster and thus you are entitled to a deduction for unreimbursed losses suffered as a result of Hurricane Florence. You can choose to claim these losses on either the return for the year the loss occurred (in this instance, your 2018 income tax return), or the return for the prior year (i.e., your 2017 income tax return).
If you believe that you incurred a casualty loss as a result of Hurricane Florence, please contact us as soon as possible so that we can provide information on documenting the loss and the appropriate actions for your income tax returns.