Last week, the IRS provided tax relief to taxpayers who lived in Hawaii, where wildfires caused disaster.
It also provided tax relief to taxpayers in Illinois and Mississippi who lived in areas affected by the severe storms
that occurred during June and July of this year.
What Does IRS Tax Relief Mean?
Not much. With the relief, you get to file and pay your taxes later. For example, individuals and businesses that lived or operated in Maui and other affected Hawaii counties have until February 15, 2024, to file returns and pay any taxes that would have been due after August 8, 2023, and before February 15, 2024.
Similar rules apply in Illinois, Mississippi, and the many other disaster areas where the IRS has granted tax relief.
So, whether you suffered a disaster or not, the big question for you is: Do you have the tax records you need to file your return?
In Hawaii, you could have lost all your records to the fire.
Too bad. The IRS requires documentation of your deductions. The fact that a fire destroyed your records does not change that rule.
Two things here:
- If the IRS selects your tax return for an audit and your tax records are not what they need to be, read Disaster Strikes: Next Trouble, an IRS Audit.
- Protect your tax records so they survive a disaster. This sounds hard, and to some extent it is, but it’s simple compared to the reconstruction of the records you need.
Protecting your records to survive a disaster might involve fireproof and waterproof safes, fireproof file cabinets, and flood barriers.
Here’s a possible easy solution: go all digital. To get this done, consider:
- Paying all bills using credit cards and bank transfers such as ACH and bill pay.
- Using a scanner that will convert documents to PDFs that have readable text, and storing those PDFs in the cloud.
- Using Copernic Desktop Search software (or a similar program) to locate readable PDF files, so you don’t need an extensive filing system.
When you are all digital, the cloud is your file cabinet. We use Dropbox for most of our cloud files. There are lots of options. One big trick: keep it simple.