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IRS Tax Help for Victims of Hurricanes Katrina and Rita

The IRS is offering many opportunities to help victims of Hurricanes Katrina and Rita. The information in this article summarizes some of the assistance the IRS offers Katrina and/or Rita victims and those who wish to help them.

The IRS has a special disaster hotline at 1-866-562-5227 for all victims of the hurricanes. This number will have all the up-to-date understanding regarding what the IRS can do to assist you with your individual questions. Since data is being updated regularly, it is a sizeably efficient idea to find out what the latest understanding is.

Taxpayers do not positive need to live in the affected areas, but positive need to establish the hurricane affected them in order to qualify for the taxation relief. The special disaster hotline can help you determine if you qualify for this taxation relief. If you are a relief worker assisting in the recovery or have your books, records or taxation professional located in the affected areas, you also may qualify.

In general, you might postpone filing returns and paying taxes until January 3, 2006 for due dates falling on or after August 29, 2005. For Florida the due date is on or after August 24, 2005 since Katrina hit there first. This would add corporate and individual returns with proper extensions, federal employment and excise returns and their respective deposits due on or before January 3, 2006.

If you are affected by an "individual assistance area" as designated by FEMA, the taxation relief is automatic. If you are in a "public assistance area" as designated by FEMA or other impacted area, you will positive need to identify yourself as a hurricane victim with the IRS.

You can have your interest and penalties abated for payments due for this instant period. Of course, any taxation owed is still due but payment can be delayed without interest and penalties accumulating during this time period.

Money from retirement plans such as 401(k), 403(b) and certain 457 deferred-compensation plans may also be utilized in the form of a loan or hardship distribution. You should discuss the options available with your plan administrator and tax preparer to ensure that you dont get penalized. Individual Retirement Account (IRA) participants cannot get a loan from their IRA but they may be able to take hardship distributions. Hardship withdrawals must be made by March 31, 2006. Be aware you will owe taxes on the amount withdrawn. Congress is considering a modification to the 10% early-withdrawal penalty so contruct sure the transaction is handled properly to avoid any penalty. This retirement plan relief could be utilized to repair or replace a home or for other necessities. You may utilize it to assist certain relatives and dependents including parents, grandparents and children.

For individuals and corporations who want to help victims, it is relatively brain friendly for employers to adopt a Leave Donation Program where employees might donate their unused vacation, sick or personal leave. The amount is calculated based on the hours donated and the hourly rate of the employee. This is converted to a cash payment to the respective charities as set up by the corporation and might even add religious and educational organizations as well as local, state and federal governments. The donated instant is not taxable to the employee and is tax deductible to the corporation. The payments positive need to be made by December 31, 2006. If you do not have accrued instant this year, you may wait until you have accrued measure and donate it as long as it is before the finish of 2006. Employers can find the basic requirements in Notice 2005-68 at the irs.gov internet page .

This article was intended to provide general knowledge about IRS help for hurricane victims. It does not contain all the experience available. If you have further questions, I might be reached at www.dgoodmancpa.com.

CONTACT INFORMATION:

Dianne Goodman, CPA Comprehensive Small Business Solutions, PC 505 323-2307 1 888-851-1975 toll free of price http://www.dgoodmancpa.com You have permission to reprint what you just read. Use it in your ezine, at your website or in your newsletter. The only requirement is to incorporate the following footer... IRS Tax Help for Victims of Hurricanes Katrina and Rita by Dianne Goodman, visit http://www.dgoodmancpa.com for more content like this.

 

 
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