Along the Gulf Coast of Mississippi and Louisiana, people are trying to put their lives back together after Hurricanes Katrina and Rita. Almost five months after Katrina traversed the Gulf states, these residents are concentrating on cleaning their homes, rebuilding, and in some cases simply finding a place to live. The last thing any of these people want to think about right now is TAX TIME. But, when a man is appointed to die just once, the tax collector shows up annually, whether he’s ready or not.
But it’s not all doom and gloom this year when it comes to taxes for people living in storm-hit areas. The Internal Revenue Service and the United States Department of the Treasury have issued a series of tax provisions following President Bush’s disaster declarations along the Gulf Coast. The following is an explanation of some of the many provisions that will help this year.
Extended deadlines for filing and paying income taxes
Taxpayers in the affected areas will have until February 28, 2006 to file any income, inheritance, gift, special or payroll tax returns with due dates as of August 29, 2005. In addition, any fines or late filing interest IRS payroll or income taxes due in this date range will be waived.
Tax relief for people displaced from housing
A special deduction has been created for people who opened their homes and their hearts to provide free housing to storm victims for at least 60 days. The deduction can be claimed on your 2005 or 2006 Federal Tax Return. The deduction is $ 500 for each displaced person housed in the taxpayer’s primary residence. The deduction is limited to $ 2,000 combined for 2005 and 2006. You must have the storm victim’s social security number. The dislocated person may be a relative. So the grandmother and grandfather who stayed with the children and grandchildren can get more benefits than just the fun of having loved ones around.
Louisiana only
Louisiana storm victims who report a casualty loss for their damages on their Federal Returns will not have their state tax deduction reduced for federal taxes paid. Taxpayers must calculate their federal tax returns with the losses and without determining the deduction on the state return.
Like I said, these are just a few of the many provisions. So, make sure that if you use a payroll tax service like ADP, you contact them to make sure they have taken the adjusted due date into account regarding your tax deposits. Additionally, you should ensure that all paid tax preparers are notified that you reside in an affected area to ensure they take this into account when filing forms and making payments. And finally, may God bless you and keep you safe. Taxes are one thing. But the safety of our loved ones and friends is always the most important.