Daily News - Businesses hit by natural disasters get tax breaks (AP) Daily Business News
NEW YORK – Small businesses that were hit by severe weather this spring can get some tax breaks from the government.
The IRS gives taxpayers, including businesses, more time to file returns or make payments following a federal disaster declaration. The government also enables them to get a faster refund when they've suffered casualty losses.
A GIFT OF TIME
After a disaster, filing a tax return or making a payment isn't going to be the top priority for a business owner. And it also might be impossible to do either task. When the president makes a disaster declaration in a stricken area, the IRS sets new deadlines for area taxpayers.
For example, on April 16, two days before this year's deadline for filing income tax returns, tornadoes and floods hit parts of North Carolina. Stricken counties were declared a federal disaster area. The IRS then gave taxpayers until June 30 to make their filings and payments. And that included 2010 tax returns.
And after a disaster declaration in parts of Illinois after April storms and flooding, business owners were given until June 30 to make payments. That includes their estimated tax payments due June 15.
The government also waived late payment penalties for taxes including employment and excise taxes.
The extensions are automatically available if you live in a place that has been declared a disaster area. If you're outside a disaster area, you can still ask the IRS for a reprieve. You need to call the IRS disaster hotline at 1 866 562-5227 to make your request.
A business owner can also get an extension if the records needed to make a filing or payment are located in a disaster area -- even if the owner isn't. That could happen if you had a warehouse with records miles away from your home or business.
GETTING YOUR REFUND MONEY NOW, NOT NEXT YEAR
If you suffer losses in a federally declared disaster, the IRS gives you the option of amending your previous year's return to claim a casualty loss, even though it happened this year. For example, the people in the South and Midwest who had losses from storms, tornadoes and flooding can amend their 2010 returns to include this year's losses.
That will get your refund money to you faster. And many taxpayers need that money now, not next April.
The IRS website, www.irs.gov, has a lot of information about casualty losses and taxes. You can download Publication 547, Casualties, Disasters and Thefts. There is a second on disaster area losses. The publication is included in the IRS' Disaster Losses Kit for Businesses, which can be downloaded at www.irs.gov/pub/irs-pdf/p2194b.pdf.
But before you rush to amend your return, you should consider whether you'd be better off deducting your losses this year. If your business is still operating, and you're expecting this to be a very profitable year, you might be better off taking the deduction for 2011 and offsetting your income with losses from the disaster. As with any other tax decision, this one should be made by considering all aspects of your business.
It's always a good idea to sit down with an accountant or tax attorney and discuss your options, especially when your emotions may be running high.
If you do decide to amend your return, you'll need to file a special form. Corporations will need Form 1120-X, Amended U.S. Corporation Tax Return. Sole proprietors who file a Schedule C with their 1040s will need Form 1040-X.
CHECK WITH YOUR STATE
Your state very likely has similar tax relief following a disaster. North Carolina announced after the April tornadoes that it was following the IRS policy. And the Utah State Tax Commission says on its website that it follows the IRS guidelines for disaster tax relief.
Comments :
Post a Comment