So, you’re dealing with the aftermath of these brutal hurricanes—Helene and Milton—and taxes are probably the last thing on your mind. We are so sorry about that, and the IRS knows that too. They’ve pushed back the deadline for filing your 2023 tax return if you’re in Alabama, Florida, Georgia, North Carolina, South Carolina, and some areas in Tennessee and Virginia. Instead of the usual tax day in April, you now have until May 1, 2025 to file. That’s an extra year to breathe and get things back in order.
What’s the Deal with This Extension?
Basically, if you live or run a business in one of these storm-hit areas, you don’t even have to do anything to get this extra time. It’s automatic. No forms, no phone calls—just an extension handed to you. Sounds good, right?
But here’s the thing: this extension only covers filing your 2023 return. If you owe taxes, you should have made those payments on time (which was due on April 15, 2024). They didn’t give an extension for that. If you have tax amount due and still haven’t paid the IRS, pay them immediately if you can. If you need payment help, call IRS to arrange a payment plan, or check this page for more information. And come May 2025, your 2024 return is also due. So, what do you get? More time to file the paperwork, but the clock’s still ticking for the payments.
What Else Can You Get?
Here’s where things get a little sweeter. If you received disaster payments—say, from a government agency to help cover personal expenses, fix up your home, or replace damaged stuff—those payments usually aren’t taxed. Yep, no tax on those disaster payments. If you want the nitty-gritty, check out Publication 525, but for most people, it’s pretty straightforward.
Got a retirement plan? The IRS has some extra perks for you, too. You might be able to take out money from your plan without getting hit with the usual 10% penalty. You can also spread that money over three years if you want. Maybe a hardship withdrawal is in your future? If so, it’s worth checking out the rules on that.
How About a Tax Deduction?
If the storms wrecked your property and insurance didn’t cover it all, you could be in line for a disaster loss deduction. It might give you a bigger tax refund. And here’s the cool part—you can either claim that loss on this year’s return (2024 tax year) or last year’s (2023 tax year). Want to know which year’s better to choose? Think about which one would give you the bigger benefit.
Here’s a little example:
You incurred $20,000 property loss after insurance and other reimbursements. The IRS has specific rules to calculate the disaster loss you can claim on Schedule A. The basic steps are:
- Calculate the total loss: This is the amount of the loss after insurance and any other reimbursements. You’ve stated your loss after insurance proceeds is $20,000.
- Subtract $100: The IRS requires you to reduce each casualty loss by $100.
- Subtract 10% of your adjusted gross income (AGI): Now, you must reduce your remaining loss by 10% of your AGI. Let’s say your AGI is $80,000.
- Find out the final deduction: Subtract this 10% of AGI from your remaining loss: 19,900 – 8,000 = 11,900
So, in this example, you would be able to claim $11,900 as a deductible disaster loss on Schedule A.
It’s worth checking out if your loss is big enough to give you a net operating loss (NOL). A taxpayer doesn’t need to have a business to have a NOL from a casualty. You can choose to carry back the NOL (as a special provision for disaster relief), or carry forward the NOL. If you carry the NOL forward to future tax years, the NOL can be offset until it is fully used.
How Net Operating Losses (NOL) Affects Future Taxes
Let’s say you have an NOL of $20,000 in 2024, and your taxable income in 2025 is $25,000. You can apply the NOL to offset up to 80% of that income, which would be: 25,000×80%=20,000.
In this case, you would only be taxed on $5,000 of your income in 2025, potentially reducing your tax liability significantly.
If your NOL is not fully used up in 2025, you can carry it forward indefinitely until it’s all used up.
Need more info? Look up Publications 547 and 536 for the details.
Lost Your Tax Docs?
If your tax records got blown away (or soaked), no worries—you can get a free tax transcript from the IRS. Just jump on the Get Transcript tool on their site. You can also ask them to mail it to you if you’re not a fan of the online stuff. Or if you’re old-school, fill out Form 4506-T and they’ll send it your way.
Changed Your Address?
If the disaster pushed you to move—temporarily or for good—don’t forget to let the IRS know where you’re at now. File Form 8822 to make sure they’ve got your new address.
Need More Help?
If you’ve got more questions, like whether you qualify for disaster-related tax breaks or you’re outside the affected area but your important records are stuck there, give the IRS disaster hotline a ring at 866-562-5227. They’ll help sort things out, whether you’re a local or just assisting with relief efforts.
In a Nutshell
The IRS is giving folks hit by these storms some extra breathing room when it comes to taxes. May 1, 2025, is your new deadline if you live in the disaster areas, so don’t stress too much about the paperwork just yet. But if you can file sooner, you might want to—especially if you’ve got a refund coming your way! Got any questions? The IRS is there to help, whether you need transcripts, advice, or a little nudge in the right direction.
We know that devastating disasters are a lot to take in. We hope this information would help take a little weight off your shoulders.