Treatment of Payments to Victims of Hurricane Sandy
In the aftermath of Hurricane Sandy, the Internal Revenue Service announced additional tax relief to affected individuals and businesses. The IRS says qualified disaster relief payments made to individuals by their employer or any person can be excluded from those individuals’ taxable income.
Qualified disaster relief payments include amounts to cover necessary personal, family, living or funeral expenses that were not covered by insurance. They also include expenses to repair or rehabilitate personal residences or repair or replace the contents to the extent that they were not covered by insurance. Again, these payments would not be included in the individual’s gross income.
Reconstructing Lost Records
For tax or other purposes, individuals, businesses or tax professionals may need to reconstruct records that were destroyed in the hurricane. Get tips on how to reconstruct your records at www.irs.gov.
Filing Deadlines Extended
The tax relief postpones various tax filing and payment deadlines that occurred starting in late October. As a result, affected individuals and businesses will have until Feb. 1, 2013 to file these returns and pay any taxes due. This includes
- fourth quarter individual estimated tax payment, normally due Jan. 15, 2013.
- payroll and excise tax returns and accompanying payments for the third and fourth quarters, normally due on Oct. 31, 2012 and Jan. 31, 2013 respectively.
- tax-exempt organizations required to file Form 990 series returns with an original or extended deadline falling during this period.
The IRS will abate any interest, late-payment or late-filing penalty that would otherwise apply. The IRS automatically provides this relief to any taxpayer located in the disaster area. Taxpayers need not contact the IRS to get this relief.
Make Your Hurricane Relief Donations Count
As Americans generously offer cash and other donations to the hurricane victims, the IRS urges you to make contributions to reputable and qualified charities. And be on alert for possible scams.
While the IRS makes no endorsements, we can help you make informed decisions about your donations:
- IRS Exempt Organizations Select Check Tool
- Your FTC Guide to Avoiding Charity & Home Repair Scams
- Volunteer and Donate via Serve.gov’s list of opportunities to volunteer; make donations and other resources.
Employer-sponsored private foundations may also provide disaster relief to employee-victims in areas affected by the hurricane without affecting their tax-exempt status. Like all charitable organizations, employer-sponsored private foundations should follow the guidance in Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations, in providing assistance to employees or their family members affected by Hurricane Sandy.
Get the Latest Disaster Updates
The IRS wants to assure taxpayers, businesses and tax preparers that it is closely monitoring the situation and will provide additional relief as needed.
Get More Disaster Recovery Information on Federal Government Hurricane-related Websites
- Publication 547, Casualties, Disasters, and Thefts
- Disaster Assistance – www.disasterassistance.gov
- Federal Emergency Management Agency (FEMA) - www.fema.gov
- FirstGov.gov, the main U.S. Government Web portal - www.usa.gov
- Department of Labor Hurricane Recovery Assistance -www.dol.gov/opa/hurricane-recovery.htm helps hurricane victims locate employee benefit plan sponsors.