Hurricane Updates: IRS Tax Related Assistance and Warning about Charity Scams

In the wake of the devastating hurricanes that have ravaged Florida and the Southeast in recent weeks, the Internal Revenue Service warned about charity scams and reassured victims that it stands ready to provide tax-related assistance to recover from these storms. Here is a rundown on tax help available from the IRS:

More time to file and pay: The IRS automatically gives taxpayers whose address of record is in a disaster-area locality more time to file returns and pay taxes. Taxpayers get the extra time without having to ask for it.

• Currently, taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina, and parts of Tennessee and Virginia, who received extensions to file their 2023 returns have until May 1, 2025, to file. Tax-year 2023 tax payments are not eligible for this extension. In addition, May 1 is also the deadline for filing 2024 returns and paying any tax due.

Disaster payments usually tax-free: Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents.

Retirement plan help: Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA

Disaster loss deduction may be available: In some instances, individuals and businesses in a federally-declared disaster area can qualify for a casualty loss tax deduction. The deduction is available for damaged or destroyed property not covered by insurance or other reimbursement and can result in a larger refund.

Free tax transcripts available: The IRS reminds anyone whose tax records were lost or destroyed, or who needs tax records to apply for disaster assistance that they can get a free transcript of their returns from the IRS.

Free copy of tax return: Disaster-area taxpayers can get a free copy of their tax return by filing Form 4506, Request for Copy of Tax Return. The IRS waives the usual fees and expedites requests for copies of returns for people who need them to apply for disaster-related benefits or to file amended returns claiming disaster-related losses.

Address change: After a disaster, people might need to temporarily relocate. Those who move should notify the IRS of their new address by submitting Form 8822, Change of Address.

Avoiding Charity Scams

Additionally, the Internal Revenue Service cautioned taxpayers of scammers who use fake charities to gather sensitive personal and financial data from unsuspecting donors. Scammers commonly set up fake charities to take advantage of peoples’ generosity during natural disasters and other tragic events.

Tax Exempt Organization Search (TEOS) tool

Those interested in making donations should first check the Tax Exempt Organization Search (TEOS) tool on IRS.gov to help find or verify qualified, legitimate charities. With this tool, people can:

• Verify the legitimacy of a charity,
• Check its eligibility to receive tax-deductible charitable contributions, and
• Search for information about an organization’s tax exempt status and filings.

Tips to avoid fake charities

• Always verify. Scammers frequently use names that sound like well-known charities to confuse people.
• Be cautious about how a donation is requested. Never work with charities that ask for donations by giving numbers from a gift card or by wiring money. That’s a scam. It’s safest to pay by credit card or check — and only after verifying the charity is real.
• Don’t share too much information. Scammers are on the lookout for both money and personal information. Never disclose Social Security numbers, credit card numbers or personal identification numbers.
• Don’t give in to pressure. Scammers often pressure people into making an immediate payment. In contrast, legitimate charities are happy to get a donation at any time. Donors should not feel rushed.

Claim a deduction

Taxpayers who give money or goods to a charity can claim a deduction if they itemize deductions, but these donations only count if they go to a qualified tax-exempt organization recognized by the IRS.

The team at Haefele Flanagan is here to advise you if assistance is needed during this difficult period. Reach out to us at (856) 722-5300 for any recovery related questions.

Source: IRS.gov