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The number of natural disasters striking has been increasing each year. In particular, there has been a rise in hurricanes, floods, typhoons, and tsunamis believed to be due to a combination of natural forces (like El Nino) and climate change.
While the number of deaths from natural disasters is decreasing thanks to better preparedness, the bad news is that natural disasters still affect about 160 million people a year.
The Financial Costs of Natural Disasters
Earthquakes, wildfires, tsunamis, tornadoes, hurricanes, and floods are not just going to make your life inconvenient for a while. They will turn your life upside down and hit your financial savings so hard that you may have to start from scratch all over again. In 2018, a federal report found that this resulted in $91 billion worth of damage in the United States alone.
Many people find that surviving a natural disaster is easy compared to having to deal with insurance companies. There is often a large amount of paperwork and time that must pass before receiving compensation for losses.
You may believe that your homeowner’s insurance will cover any damage to your house and the contents in it, but this is not always the case. In fact, homeowner's insurance generally does not cover floods, earthquakes, mudslides, landslides, and sinkholes. A bit of bad luck and you could be financially ruined for the rest of your life.
Tax Relief for Natural Disasters
One financial benefit that people often initially overlook in the face of natural disasters is eligibility for tax relief. While a personal loan can help you get immediate funds, tax relief opportunities can also benefit you. IRS tax relief is a real thing and could help you get back on your feet again. According to the IRS’s own policy, if you or your business are located in a federally designated disaster area, you are considered an affected taxpayer and can receive certain special benefits. Let’s explore the types of tax relief available to those who have gone through a natural disaster.
1. Access Your Retirement Accounts Without Penalty
Most of us probably have some sort of retirement account, either a 401k or IRA, for when we finally reach our golden years. However, we all know that if we touch the money early in these accounts before we reach a certain age, we are subjected to penalties such as the 10 percent early withdrawal penalty inflicted on us by the IRS.
If you have survived a natural disaster, however, you can take advantage of free access to your retirement accounts, helping you with your current financial needs without facing any type of penalty. There are certain limitations involved in this, so you should be certain to contact reputable tax relief companies first.
2. Save Money with Casualty Deductions Tax Relief
When filing your taxes, it is always a great idea to look for as many deductions as possible. If your home has been damaged due to a natural disaster and insurance is not covering all of it, you can deduct the amount that you are covering out of pocket on your taxes. Keep in mind that the insurance company must have turned down your claim. In other words, just paying for things yourself without filing a claim first will not count as a casualty deduction. Be sure to keep all of the paperwork from the insurance company and every receipt for everything you had fixed on your own. The IRS is not known for blindly trusting anyone and they will want to examine everything you have.
If all of this sounds complicated and overwhelming, consider using a tax relief company such as Anthem Tax Services. They will provide you numerous tax resolution services, including preparing your taxes for you and making sure you get as many deductions as possible. They start by giving you a free tax consultation. This is the perfect time to ask any questions that you may have about tax relief for natural disasters.
3. Extended Tax Filing Deadlines
If you’ve recently suffered from a natural disaster, the last thing you want to deal with is filing your taxes. You may be able to benefit from a six-month extension in filing your taxes. In the meantime, you can then focus on repairing your home and getting your life back in order. Talk to a professional to find out if you’re eligible to partake in a late tax filing without being charged a penalty fee.
Afraid You Will Not Be Able to Handle Filing for Tax Relief on Your Own?
People often get bogged down with paperwork. Because of this, they lose out on money that they should be getting back from the IRS. This is true for individuals that survive natural disasters or just the ordinary citizen that gets confused by the perplexing tax laws. However, you don’t have to tackle this alone. There are tax relief companies that specialize in helping you get your money back from the IRS. They may cost you extra at the time, but a good tax relief company will pay for itself with the money they are saving you.
For instance, Community Tax is a tax relief company that will negotiate on your behalf. Tax attorneys, certified public accountants, and enrolled agents can mediate tax relief with the IRS for you. Luckily, Community Tax has all three types of these professionals on their payroll.
Explore Tax Relief If You Have Gone Through a Natural Disaster
Natural disasters affect millions of people every year. While most people survive, the financial hardships that follow can be crippling. Explore the possibility of natural disaster tax relief. Every dollar helps when rebuilding in the aftermath of a natural disaster. It is only right for you to take advantage of this IRS tax relief benefit.
Article Topics
Taxes
With years spent researching finance and loans as a journalist, Ryan is more than eager to share with others the secrets and tips he has learned over time. He is able to break down any financial topic so that the ordinary person can understand without needing a degree in finance or accounting. For the last decade, he has been teaching kids and adults how to make wise financial decisions in their lives.
