The IRS is extending upcoming tax deadlines to June 15th for victims of the February winter storm in Texas. Here’s everything you need to know about the new filing and payment deadline, what you should do if your home was damaged during the storm, and a helpful list of IRS resources for disaster situations.
Deadline and Payment Extensions
On February 14th, 2021, the state of Texas was federally declared a disaster area due to winter storms. Because of this, taxpayers in the state of Texas now have until June 15th, 2021 to file various individual and business tax returns and make tax payments. Taxpayers with an address located in the disaster area will automatically receive the extension, while people located outside the region, but whose records are located in the affected area, should contact the IRS directly at 866-562-5227. This includes those who are assisting with relief activities through a recognized government or philanthropic organization.
Deducting Losses from a Disaster
Any federally declared disaster area is eligible for federal assistance. We recommend that all taxpayers with damage from the storm thoroughly document the damage and repairs process. This includes taking photos, saving receipts, etc. Losses can be claimed on the year the loss was incurred or on the return of the prior year, meaning taxpayers can choose to claim the losses on their 2020 return they are filing this season.
To determine the amount of your casualty loss you must:
- Determine your adjusted basis on the property before the casualty. This includes what you paid for the property, as a result of the events.
- Determine the decrease in fair market value of the property as a result of the casualty.
- Subtract any insurance or other reimbursement you receive from the adjusted basis and fair market value.
Determining Fair Market Value
Fair market value is the price at which you could sell your property. This is determined through a competent appraisal or the cost of cleaning up and making repairs under certain conditions. These conditions include:
- Repairs are actually made
- Repairs are not excessive and are necessary to bring the property back to its condition before the casualty
- Repairs are not making the property worth more than before the disaster happened
If you have questions or need assistance with your tax return, Five Stone is here to help. Book your consultation today. For more information on dealing with the IRS during disaster situations, visit the links below.