Tax Relief

Tax breaks obtainable for California forest fireplace victims

The IRS has given California wildfire victims more time to file various individual and corporate tax returns and make tax payments. In particular, victims of the fires that began on July 14 have until November 15, 2021 to file and pay tax returns and payments due between July 14 and November 14.

The tax break is available to anyone in any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. This includes people affected by the forest fires who live or have businesses in Lassen, Nevada, Placer, and Plumas counties.

The IRS will also work with any taxpayer who lives outside the disaster area but whose tax records are in the disaster area. Call the IRS at 866-562-5227 if you are faced with this situation. This also includes auxiliaries who are affiliated with a recognized government or philanthropic organization.

The IRS also waived fees for obtaining copies of previously filed tax returns for taxpayers affected by the forest fires. To request copies of a tax return or tax return transcript, write “California Wildfires” in bold at the top of Form 4506 (copy of the return) or Form 4506-T (transcript) and submit it to the IRS.

Deadlines extended

The postponed deadlines include October 15, 2021, the due date for filing an extended 2020 income tax return (the original due date was May 17, 2021). California forest fire victims will also have more time to make the estimated quarterly tax payments due on September 15, 2021.

The due date of the quarterly wage and excise tax returns, which are normally due on August 2, 2021, will also be extended for forest fire victims. The wage and excise tax payments due from July 14th to July 28th also apply, provided that the payments were made by July 29th, 2021.

Taxpayers don’t need to turn to the IRS to get this relief. However, if a data subject receives a late filing or payment order from the IRS, he or she should call the number on the notice to waive the penalty.

Deduction for damaged or lost property

California wildfire victims may be eligible for a tax deduction for non-refundable damaged or lost items. To do this, they usually have to list and submit Appendix A with their tax return. However, victims claiming the Standard Deduction may still be able to deduct their losses if they can claim them as Appendix C business losses.

The deduction can be claimed in either a 2020 tax return or a 2021 tax return (due next year). In either case, you must write the FEMA declaration number on the return item where the deduction is claimed. For the recent California wildfires, the number is FEMA 4610-DR. Affected taxpayers claiming catastrophe damage on a 2020 return should also put the California Wildfires in bold at the top of the form. See IRS Publication 547 for more information.

If you opt for a 2020 deduction and have already submitted your 2020 statement, you can change your 2020 statement by submitting Form 1040X. For this purpose, you must submit your corrected previous year’s declaration no later than six months after the due date for submitting the current annual declaration (without extensions) for the year in which the damage occurred. So for California forest fire losses in 2021, you must file a 2020 amended declaration by October 17, 2022.

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