By Paul N. Gada, CCH Financial Planning Toolkit Staff Writer
Filing your taxes can be challenging under normal circumstances. Most of us can consider ourselves lucky this year, though. Just imagine trying to file a tax return while piecing your life together after one of last year’s hurricanes. Fortunately, several resources are available to help hurricane victims get through this extra stressful period.
The IRS recently announced an agreement with two tax professional associations to assist taxpayers impacted by Hurricanes Katrina, Rita and Wilma. Volunteers at the IRS's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites are now able to refer low- to moderate-income taxpayers who were affected by the hurricane(s) and who need help with relatively complex tax issues to participating members of the American Institute of Certified Public Accountants (AICPA) or the American Association of Attorney-Certified Public Accountants (AAA-CPA) for free return preparation assistance.
"We are happy to partner with tax professional associations like the AICPA and AAA-CPA to help deliver the assistance these taxpayers need," said IRS Director Customer Assistance, Relationships and Education Mark Pursley. "This tax assistance can truly make a difference in people's lives."
"Our members recognize that hurricane victims face many challenges. We hope that this service will help by giving the victims one less thing to worry about," said Barry Melancon, AICPA President and CEO. "We are glad that our partnership with the IRS has been expanded to include a service that many CPAs see as a way to give back to their communities."
"No matter where you live, technology gives CPAs across the nation the opportunity to volunteer right from our own desk," said Charles R. Kowal, Partner and Director, Personal Financial Services, Ernst & Young LLP, one of the largest participants in the AICPA initiative. "Technology has made those in the Gulf Region our virtual neighbors, and it's time to give our neighbors a helping hand."
Taxpayers wishing to take advantage of this free assistance need to first visit a VITA or TCE site. Convenient locations in communities across the country can be found by calling the IRS at 1-800-829-1040 or by calling AARP, the nation's largest TCE sponsor, at 1-888-AARP NOW (1-888-227-7669).
Tax deadlines extended. Filing and payment deadlines for taxpayers hit hardest by Hurricane Katrina have been further postponed. Taxpayers in Cameron, Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles and St. Tammany parishes in Louisiana and in Hancock, Harrison and Jackson counties in Mississippi automatically have through August 28, 2006, to file returns and make certain tax payments that had a due date or extended due date on or after August 29, 2005, and on or before August 28, 2006. These deadlines had previously been postponed until February 28, 2006. Taxpayers who suffered severe hurricane damage outside of these areas should identify themselves as impacted to receive postponement.
The disaster area that is eligible for additional relief by self-identification includes 11 counties in Alabama, 24 parishes in Louisiana and 46 counties in Mississippi. Self-identification can be accomplished by writing Hurricane Katrina in red ink at the top of the return when filed, or by calling the IRS disaster hotline at 1-866-562-5227.
Most tax returns are affected by this relief, including individual returns, corporate returns, partnership returns, S corporation returns, trust returns, estate, gift and generation-skipping transfer tax returns and employment and certain excise tax returns. The postponement does not, however, apply to information returns in the Form W-2, 1098, 1099 or 5498 series, or to Forms 1042-S or 8027. The postponement also does not apply to employment and excise tax deposits; however, the IRS will abate penalties for failure to make these deposits in a timely manner if the deposits were due on or after August 29, 2005, and on or before August 28, 2006, provided the taxpayer made these deposits by August 28, 2006.
Hurricane victims struggling with this year's taxes should also keep in mind that they can always file for an extension. Staring this year, all taxpayers can get an automatic six-month filing extension by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by the April 17 due date.
Additional information. There are many new tax laws related to last year’s hurricanes. In light of these developments, the IRS has released a fact sheet that summarizes the major tax breaks provided by the Gulf Opportunity Zone Act of 2005 and the Katrina Emergency Tax Relief Act of 2005 to those affected by Hurricanes Katrina, Rita, and Wilma.
The IRS has also provided a full explanation of these new laws in IRS Publication 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma. The publication lists the disaster areas for each hurricane and explains the tax breaks and changes for the various areas, providing information useful to both individuals and businesses in the affected Gulf areas. Like other IRS forms and publications, Publication 4492 is available at IRS.gov.
Hopefully, the resources above will help get hurricane victims though this difficult tax filing season. Next year, though, everyone should once again be equally confused and frustrated come tax time.
- Related items:
- New Tax Year Means Many Tax Changes to Consider
- Congress Finalizes Katrina Tax Relief, Turns to Reconstruction Funding
Added to the news on March 30, 2006.
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