Natural disasters are occurring with increasing frequency due to a combination of factors, including the impact of climate change. In 2021 the United States experienced 20 separate billion-dollar weather and climate disasters, according to Climate.gov, placing it second for the most disasters in a calendar year behind the record 22 events in 2020.
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Dozens of smaller events take place every year as well, making it increasingly important for people to prepare ahead of time. This includes protecting important financial documents such as tax records.
IRS Commissioner Chuck Rettig addressed this topic in a May 5 column on the agency’s website as part of National Wildfire Preparedness Month in May and Hurricane Preparedness Week this week. The column runs down some of the things you can do to prepare for potential disasters from the aspect of safeguarding your tax and financial records, as well as learning about resources and tax provisions provided by the IRS to help individuals and businesses impacted by a disaster.
In terms of disaster planning, Rettig recommends the following:
Use paperless recordkeeping for all financial and tax records
Document all of your valuables and business equipment
Create or update your continuity of operations plans for businesses
Update your emergency plans in case disaster strikes
If you are already the victim of a natural disaster, you should familiarize yourself with special tax law provisions designed to help taxpayers and businesses recover financially from the impact — especially when the federal government declares your location to be in a disaster area.
Depending on the circumstances, the IRS might grant additional time to file your returns and pay your taxes. Individuals and businesses in a federally declared disaster area can also get a faster refund by claiming losses related to the disaster on the tax return for the previous year, usually by filing an amended return.
For more information, visit the IRS’s Disaster Assistance and Emergency Relief for Individuals and Businesses page on IRS.gov. It provides answers to frequently asked questions, the latest tax relief guidance for disaster situations, and information specific to local areas such as tax provisions that affect certain states.
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Another helpful resource is IRS Publication 3067: IRS Disaster Assistance – Federally Declared Disaster Area, which provides information to individuals and businesses affected by a federally declared disaster and the assistance available to disaster victims.
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This article originally appeared on GOBankingRates.com: Financial & Tax Paperwork to Safeguard in Case of a Natural Disaster
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