Earthquakes, Wildfires, Tornadoes and Hurricanes can cause a level of stress to us as individuals, but as business owners these disasters amplify the stress because any of these can take away everything we have worked so hard to build in a very short period of time. However, a good disaster readiness plan can help reduce some of that stress by ensuring that you and your business are prepared when the time comes. A good disaster readiness plan is part of a sound financial plan. Whether you are a tax preparer or an accounting professional who does not touch taxes, you can set yourself apart by offering up some recommendations to help your clients prepare.
The IRS recently issued Tax Tip 2020-99 encouraging “taxpayers” to prepare. While the Tip includes developing evacuation plans, putting together kits of essential supplies and putting financial safety measures in place, the IRS Tax Tip 2020-99 focused on 5 main categories to help protect financial security.
- Update Emergency Plans – An annual review of your personal and business emergency plans is recommended. You can find ideas for individuals and families at https://www.ready.gov/plan and for businesses at https://www.ready.gov/business
- Create electronic copies of key documents – Whether you store them in the cloud, on a flash drive or on a CD, make sure you they are in a “safe place” that is not impacted by natural disasters. I prefer back up copies of the backups, even the ones stored in the cloud. Call me crazy!
- Document your valuables – Take out your phone and video every room, draw and closet in your home. If you really want to be protected and prepared, open up all of those boxes of Christmas ornaments and don’t forget the mess in the garage! In the event a natural disaster occurs, the more you have documented the more you will recover.
- Know what tax relief is available in disaster situations – IRS.gov features information on disaster assistance and emergency relief for individuals and businesses. Remember that personal and casualty theft losses are only deductible to the extent they are attributable to a federally declared disaster.
- The IRS is ready to help – In the case of a federally declared disaster, people can visit Around the Nation on IRS.gov and click on their state to review the available disaster tax relief. Taxpayers who live in counties qualifying for disaster relief receive automatic filing and payment extensions for many currently due tax forms and don’t need to contact the agency to get relief. People with disaster-related questions can call the IRS at 866-562-5227 to speak with an IRS specialist trained to handle disaster issues. They can request copies of previously filed tax returns and attachments by filing Form 4506, order transcripts showing most line items through Get Transcript on IRS.gov or call 800-908-9946 for transcripts.
