Preparing Financial and Tax Information following a Disaster

Put a plan in place for potential disasters

Taxpayers are encouraged to take steps now to ensure they’re prepared in case they are impacted by a disaster or emergency.

Review and update emergency preparedness plan annually
Taxpayers should review their emergency preparedness plan, at least annually. Ready.gov has resources and checklists to help people put together their emergency preparedness plan.

Create electronic copies of documents
Taxpayers should keep important documents and storage devices in a safe place. If original documents are available only on paper, taxpayers should consider converting them to electronic versions and storing them on a USB flash drive or in the cloud. Many financial institutions provide statements electronically. All taxpayers are encouraged to create an IRS Individual Account. They can access online transcripts, notices, and other tax information.

Document valuables
Take pictures or video of valuables before disaster strikes. It makes it easier to claim insurance and tax benefits. IRS.gov has a disaster loss workbook that can help taxpayers compile a room-by-room list of belongings.

Understand tax relief available for disaster situations

  • Information on disaster assistance and emergency relief for individuals and businesses disaster assistance and emergency relief for individuals and businesses is available at IRS.gov. Taxpayers should also review Publication 547, Casualties, Disasters and Thefts.
  • Taxpayers who live in a federally declared disaster area can visit Around the nation on IRS.gov and click on their state to review the available disaster tax relief. Those who live in designated areas for disaster relief receive automatic filing and payment postponements for many currently due tax returns and don’t need to contact the agency to get relief.
  • Taxpayers and practitioners who live in a federally declared disaster area with disaster-related questions can call the IRS Special Services Hotline at 866-562-5227 to speak with an IRS specialist.

More information

How taxpayers can Reconstruct their records after a disaster

Some taxpayers may need to reconstruct vital records that were lost in a disaster. Having these records is important for tax purposes, federal assistance or insurance reimbursement. Here are a few steps people who were affected by a disaster can take if they need to obtain their lost records.

Replace tax records
A recent tip explained the different types of tax transcripts and how to get them. The most common type needed after a disaster loss is a tax return transcript. Taxpayers can:

Financial and bank records
Credit card companies and banks often provide users with access to past statements.

Reconstruct personal property records
Photos, videos, canceled checks, receipts can help establish the value of damaged or lost property. They can also check online sources to help determine fair market value.

Real property records

  • Property documents: Contact the title or escrow company or bank that handled the purchase of the home or other property for copies of the records.
  • Home improvements: Get in touch with the contractors who did the work and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
  • Inherited property: Check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
  • No records: People with no records available should check the county assessor’s office for old records that might address the value of the property.

Vehicle records
Vehicle owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. They can also contact the dealer where the car was purchased and ask for a copy of the contract.
Taxpayers in a disaster area may now see personalized messages in their IRS Individual Online Account. The messages highlight tax relief, including extended filing and payment deadlines as well as a link to other disaster assistance information. They can also find news about disaster tax relief specific to their area on the Around the nation page of IRS.gov.

More information

Taxpayers can find news about disaster tax relief specific to their area on the Around the Nation page of IRS.gov.

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The SECURE 2.0 Act makes it easier for qualified individuals impacted by a federally declared major disaster to access their retirement savings.

Eligibility

A taxpayer may be eligible for relief that provides for expanded access to their retirement funds if their principal residence was in a major disaster area and they sustained an economic loss due to that disaster. An economic loss includes, but is not limited to:

  • Being displaced from the taxpayer’s principal residence.
  • Loss or damage to or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind, or other cause.
  • Lost income due to temporary or permanent layoff.

Use the tool on FEMA.gov/Disaster to find a current list of major disaster declarations.

Types of relief

These types of disaster relief are available to people who qualify:

  • May withdraw up to $22,000 from an IRA or other eligible retirement plan.
    • Amount exempt from the 10% early distribution tax.
    • May repay to a retirement plan or IRA within three years of the distribution.
    • Distribution may be included equally in income over three years.
  • A retirement plan may offer increased loan limits and delay repayments.

The IRS is here to help

For questions and assistance, call the IRS disaster hotline at 866-562-5227.

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More information

IRS Tax Relief Following a declaration of a disaster zone by the Federal Emergency Management Agency, the IRS frequently postpones tax filing and payment deadlines, more information is available on the IRS Disaster Relief page on IRS.gov. If you are in a federal disaster zone, you may qualify for filing and payment relief. Individuals who are not in the covered disaster area but are impacted by a specific disaster may still qualify for relief. If you wish to speak to a trained IRS specialist, you may call 866-562-5227 for answers to disaster-related concerns.

Energy Efficient Home Improvements could help survivors reduce energy bills and taxes in the future.  Homeowners who make improvements like replacing old doors and windows, installing solar panels or upgrading a hot water heater may qualify for home energy tax credits.


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Business owners: Make sure emergency preparedness plans include financial records

When business owners put together an emergency preparedness plan, it should include copies of vital records and financial information.

Here are some things everyone can do to help protect their financial records.

Update emergency preparedness plan annually
Personal and business situations are constantly evolving, so taxpayers should review their emergency preparedness plan annually. Ready.gov has resources and checklists to help people put together their emergency preparedness plan.

Create electronic copies of documents
Taxpayers should keep important documents in a safe place. This includes bank statements, tax returns and insurance policies. This is especially easy now since many financial institutions provide statements and documents electronically. If original documents are available only on paper, taxpayers can use a scanner and save them on a USB flash drive or in the cloud.

Document valuables
Documenting valuables by taking pictures or videoing them before disaster strikes makes it easier to claim insurance and tax benefits. IRS.gov has a disaster loss workbook that can help taxpayers compile a room-by-room list of belongings.

Tax relief available for disaster situations
Information on disaster assistance and emergency relief for individuals and businesses is available at IRS.gov. Taxpayers should also review Publication 547, Casualties, Disasters and Thefts.

Taxpayers who live in a federally declared disaster area can visit Around the nation on IRS.gov and click on their state to review the available disaster tax relief. Those who live in counties qualifying for disaster relief receive automatic filing and payment postponements for many currently due tax returns and don’t need to contact the agency to get relief.

People with disaster-related questions can call the IRS Special Services Hotline at 866-562-5227 to speak with an IRS specialist trained to handle disaster issues.

If people have lost their tax documents, they can order tax transcripts or request copies of previously filed tax returns and attachments through Get transcript on IRS.gov, by filing Form 4506, Request for Copy of Tax Return or by calling 800-908-9946.

More information
Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook