I hope this letter finds you and your loved ones safe and well.
Recent natural calamities in various parts of our nation have caused considerable distress. I want to bring to your attention some crucial tax-related implications and preventive measures you may consider.
IRS Tax Relief Update
For Hawaii residents. The IRS has granted tax relief to taxpayers in Hawaii affected by recent wildfires by allowing them until February 15, 2024, to file returns and pay any taxes that would have been due after August 8, 2023, and before February 15, 2024.
For Illinois and Mississippi residents. The IRS also granted tax relief to Illinois and Mississippi residents affected by severe storms in June and July. The tax relief is similar to that provided to Hawaii residents, granting extensions for tax filings and payments.
Impact on Tax Records
If, unfortunately, you suffered damages during these calamities, especially in Hawaii, there’s a chance you may have lost crucial tax records to the fires. I must stress that the IRS maintains its stance on requiring documentation for deductions. The destruction of records by natural causes does not exempt you from this obligation.
Practical Measures to Secure Your Tax Records
Stay prepared for audits. If you suffered a disaster, would your records survive? If they did not, the IRS allows you to reconstruct them. Imagine that experience.
Securing your records. Consider fireproof and waterproof safes, file cabinets, and flood barriers to protect physical documents.
Digital transformation. A promising solution is transitioning to an all-digital record-keeping system:
- Pay bills using credit cards and bank transfers such as ACH and bill pay.
- Scan documents to create searchable PDFs, and store them in cloud services such as Dropbox, Google Drive, Microsoft OneDrive, Apple iCloud, and Amazon Drive.
- To avoid complex filing systems inside the cloud, use desktop search software such as Copernic Desktop Search or X1 Search.
Stay safe, and please reach out by booking a call if you have any questions or concerns.