Tax Relief For Hurricane Victims Explained w/ Mark Kohler and Farah Saleh

Well, it's hurricane season again and unprecedented tragic destruction and impact all along the East Coast. And our hearts go out to all of those that have been impacted in devastating ways with personal property damage and physical injury and just having their lives turned upside down. And as expected, the IRS has released a notice giving special tax provisions and filing extensions of filing deadlines and other provisions that should be helping taxpayers and these devastated areas. And I'm here with Farah Saleh, a CPA and tax resolution expert working out of Florida and Michigan, has clients personally impacted by this devastation here to help me unpack this new notice. Vera, thanks for being here.

Thank you for having me.

Well, we really need to hear from you. How was your home? Were you affected by this personally? I know I think you're in Michigan right now.

So Milton is headed more so towards the west side. We don't actually know this is going to go to the south side just yet, but so far so good.

Okay, well, we will be praying for you. Hopefully your home won't be destroyed while you're away. Let's talk about this. So the IRS issued this notice on October 1st. There's several provisions in there. We're going to unpack this as simply and as easily and quickly as we can here so that you guys can get the information you need. So tell us a little more about it. I think big one para is the ability to not file your taxes on October 15th if you had filed an extension. Because we're, as of this recording, we're about five, six days away from October 15th. And a lot of people that needed to still file tell us about that provision and really that key part of the notice.

Yeah, absolutely. So taxpayers that are impacted in the following states, such as Alabama, Georgia, North Carolina State, South Carolina, parts of Florida, Tennessee and Virginia may qualify for some type of payment or filing relief with the IRS. This news release did come out on October 1, 2024. So this applies to individuals who did have a valid extension to file their 2023 tax return that was supposed to be due on October 15th. They now have until May 1st of 2025 to file. And this covers only parts of Florida and parts of other states at the moment. So if you want to double check as to whether or not you qualify, you're going to want to look up your county on the IRS's website.

So let's talk about this. I think it's so important for everyone to know that this extension to file is not an extension to pay. That's not any part of this notice. So if any of you owe the irs, we've got to talk about that. We've got actually a link to another video down below on where Farah and I talk about ways to deal with not being able to pay the irs. A common, tragically, another common issue across America right now with people in financial straits. But right now this is an extension to file. So if I, 20 million Americans file an extension this year for 2023 taxes, if I did file an extension, I have until October 15th. Now I have until May 1st. And what does that mean with payments? Should I what would you recommend to people that still think they might owe? What would, what procedure would you recommend?

So if taxpayers are suspecting that they still owe on their, on their tax extension for 2023, I would at least try to do some type of projection to prepare for different types of resolution options. I know some taxpayers have been very much financially impacted. So I would certainly take this time to come up with some sort of strategy as far as how you want to resolve your, your tax debt.

Well, and also for some of you, like, well, I haven't prepared my return and I'm grateful I get to file later, but I don't want any more problems. They can do an estimate. I think that's something a lot of people can do. They can look at their 2022 tax return, try to dig it out of archives, call your accountant. You maybe have a digital copy somewhere. Many people, people are uprooted and living in hotels or with family. Look at your 2022 tax return. And if your life has been pretty much the same in 2023 compared to 2022, look at the bottom line. Did you owe before? Send that in with a payment coupon and send it to the IRS before October 15th. And that's going to help alleviate, alleviate some of the other penalties and interest from not paying. But again, you don't have to actually file your tax return until May 1. Anything you want to add to that, Farrah?

Yes. So even though this relief doesn't go towards payment relief for your 2023 tax bill because it was still due on tax day, which is April 15th of 2024, if you do have an estimated tax payment obligation, that does also delay your estimated tax payment deadline until May 1st of 2025 for your quarter four estimated tax payment for 2024 and your Q1 payment for 2025, that's great.

I want to restate that for everybody, especially you small business owners out there. You're making quarterly estimated payments. And so Q4 estimated payments are typically done. Some people do them monthly, but your deadline is going to be in January. And then Q1, you would have to make that payment by April of 2025. Both of those payments can. Now you can kick them down the road to May 1st. Now, I'm going to say as a practical note, I know some of you may be as well devastated financially rather than just physically having to move. But if you do have the money in the bank for those estimated payments, even though you have that extension to make the payment, sometimes waiting till that date can make it harder to pay. We can use that money frivolously, or some of you need that money right now and that's why they're doing this. But just be careful. A lot of people put blinders on and go, hey, I got an extension I don't need to make Q4 Q1. And then all of a sudden May comes around and they're like, holy crap, I should have just done it anyway. Because you may have that tendency to not be able to keep your hands out of the cookie jar. So be careful, folks, with that, that concept. Now far there was also something about 2024 tax filing. So with these people that are uprooted, they can put off their estimated payments. What about their 2024 tax return that most people would normally file by April 15th?

Yes. So again, just depending on the county that you live in, you want to double check on the IRS's website, you may also be able to delay that filing until May 1st of 2025. Cool.

And that would be for the extension as well. So if you want to file extension instead of April 15, you could do May 1 in 2025 for your 2024 taxes. This can be so confusing.

Yes.

Do you have any other sage advice for anybody again, impacted in this situation? I know you've got clients calling you, asking you, what do I do, what do I do? What are some of the common situations that your clients are facing and what you're recommending?

Great question. So in a situation like this, where taxpayers are really facing a lot of difficulties financially and so forth, you kind of, you kind of spoke up about it. But making voluntary payments is a really good first step if they're able to. The IRS loves it when taxpayers make a good faith effort in trying to really handle their tax matters as efficiently as they can, or to just to be more proactive. And if you think that you're going to end up owing and you want to try to get this resolved as soon as possible, then it might Be in your best interest to try to still file timely on the October 15th deadline if you can, and then trying to get to some sort of payment plan if possible. Because going back to Mark's point, it could potentially be kicking the can down the road until early next year. And now you have all these estimated tax payment obligations plus your 2023 tax obligation that you are putting off, and it could really financially burden you. Yeah. So if, if you could take some type of proactive precautions at this time, I highly recommend it.

Yeah. And I want to add something about damage to records. I faced it a little bump in the road myself this last summer. We had a little flood in the summertime camping and RV camping and all this in my computer got swamped and it literally had a lot of my 2023 tax records on it.

And.

And so I had to pay for a data recovery to go in and get that information off the hard drive. I was able to do that. But for you business owners out there, it's not as sometimes as much as getting a delay on filing. Now you're like, where the hell are my records? My laptop was destroyed. I don't even have the right. I don't have any information. So I want to maybe say a couple things. One, there are those data recovery services that are getting better and better. Try to recover those hard drives and those laptops and iPads or whatever you have. Hopefully a lot of stuff is on the cloud. You weren't like me and just keeping it on the laptop, that was a lesson learned. But also, Farrah, as a tax resolution expert, you are able to go in and get transcripts. This is where working with a professional might be helpful to say, let's start gathering that data now and get with a professional. When you have a little breathing room. What are your thoughts on data?

Yeah, great question. So luckily, if you are an individual taxpayer and you did potentially lose your documents that you needed to provide to your accountant, you can actually go to the IRS's website and create an account, if you don't already have one, and obtain your wage and income transcripts right then and there. And the wage and income transcripts will show all sources of your income. So if you're not able to provide that information just due to loss of the documents, it is still shown on the transcripts and it could be quite useful in preparing your return.

And that's folks, that's going to give you any deposits you made over the last 12 to 18 months, 1099 records. And if you've lost receipts there's methods to make sure your typical and reasonable business expenses are still you're still able to deduct those. But get with someone that knows what they're doing. And Farah lumontax resolutions.com we can send people there to your website, too, if they need help with that.

Yes, absolutely. I'll be happy to assist you. Or if you have any questions, just feel free to reach out.

Okay. Well, that information should be on the screen as well as down below. Well, Farah, thank you so much. We hope that your home is not damaged. And our hearts and prayers go out to your clients as well in the Florida area. And thank you so much for spending some time with us and figuring this out.

Thank you so much for having me. I appreciate it.

Thank you.