As winter storms loom and natural disasters remain an ever-present risk in many areas of the United States, the Internal Revenue Service (IRS) is reminding taxpayers to prepare for potential emergencies. While taxes might not seem like a priority during the holidays or in the face of disaster, safeguarding essential documents and financial records can save you significant trouble later.
IRS Disaster Relief
The IRS frequently extends tax filing and payment deadlines for areas impacted by natural disasters, including hurricanes, tornadoes, and floods. These extensions are automatic for taxpayers in federally declared disaster zones. However, reconstructing lost documents and financial records for filing taxes or applying for relief can be a daunting task when recovering from a disaster.
Updated and accessible records not only assist in tax filings but also help victims apply for disaster relief and financial aid from the IRS and other agencies.
Document Safekeeping
The IRS advises safeguarding the following critical documents:
- Tax returns (last several years)
- Birth certificates
- Social Security cards
- Deeds and property titles
- Insurance policies
These records should be stored in waterproof and fireproof containers.
Backup Strategies
- Digital Copies:
Scan or photograph all important documents and save them in a secure digital format. Cloud storage services or encrypted external drives ensure accessibility even if physical copies are lost. - Trusted Third Parties:
Share copies with trusted friends, relatives, or legal representatives. This redundancy offers peace of mind if your primary storage is compromised. - Local Records and Public Offices:
Remember that public institutions, banks, or even the IRS may have copies of key documents. However, retrieving them may take time, especially if the disaster has disrupted local services.
Asset Inventory
Keeping an up-to-date inventory of your assets can simplify dealings with insurance companies and the IRS. When filing insurance claims or seeking tax benefits, accurate records can speed up the process and provide the necessary evidence.
How to Create an Inventory
- Photographic Evidence:
Take photos or videos of your belongings, focusing on high-value items like electronics, jewelry, and specialty equipment. - Detailed Descriptions:
Document details such as make, model, year of purchase, and condition. - Digital Records:
Store this inventory digitally to ensure easy access during emergencies.
Plan Ahead
Natural disasters can strike without warning, but proactive preparation can ease the recovery process. Safeguarding essential documents, maintaining a detailed inventory, and addressing IRS relief options can help protect your financial future. Take time this season to ensure your records are safe—your future self will thank you.
FAQs
Why should I protect tax records?
Protecting records helps in filing taxes and claiming disaster relief.
What documents should I safeguard?
Keep tax returns, Social Security cards, deeds, and insurance policies.
How can I back up important documents?
Scan and store them digitally in a secure location.
What if my documents are destroyed?
Public offices and the IRS may have copies, but retrieval can take time.
Why is an asset inventory important?
It simplifies insurance claims and tax filings after disasters.
