Tax Breaks

Tax Relief Available for California Wildfire Victims

Residents and businesses impacted by the California wildfires get more time to file and pay taxes.

The IRS has granted victims of the California wildfires more time to file various individual and business tax returns and make tax payments. Victims of the fires that began on August 14 have until December 15, 2020, to file and pay tax returns and payments due between August 14 and December 14. For victims of the wildfires that began on September 4, due dates from September 4 to January 14 are pushed back to January 15, 2021.

The tax relief is available to anyone in any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. For victims of the August fires, this currently includes California residents and businesses in Butte, Lake, Lassen, Monterey, Napa, San Mateo, Santa Clara, Santa Cruz, Solano, Sonoma, Trinity, Tulare, and Yolo counties. For the September wildfires, the list currently includes Fresno, Los Angeles, Madera, Mendocino, San Bernardino, San Diego, and Siskiyou counties. However, taxpayers in places added later to the disaster area will automatically receive the same filing and payment relief.

The IRS will also work with any taxpayer who lives outside the disaster area but whose tax records are in the disaster area. Call the IRS at 866-562-5227 if you face this situation.

Deadlines Extended

The deadlines that are pushed back include the October 15, 2020, due date for filing a 2019 income tax return that was extended (the original due date was July 15, 2020). However, because 2019 income tax payments were due on July 15, those payments are not eligible for this relief.

California wildfire victims will also get more time to make the quarterly estimated tax payments that were due on September 15, 2020.

The due date for quarterly payroll and excise tax returns normally due on November 2, 2020, are extended for wildfire victims, too. For victims of the August wildfires, penalties on payroll and excise tax deposits due from August 14 to August 30 will also be waived as long as the deposits were made by August 31, 2020. Likewise, victims of the September wildfires can avoid these penalties due from September 4 to September 20 if the deposits were made by September 21, 2020. Various other due dates for business tax filings and payments are extended, too.

Taxpayers don't need to contact the IRS to get this relief. However, if an affected person receives a late filing or late payment penalty notice from the IRS, he or she should call the number on the notice to have the penalty abated.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for additional time.

Deduction for Damaged or Lost Property

Victims of the California wildfires may be able to claim a tax deduction for unreimbursed damaged or lost property. To do so, they typically must itemize and file Schedule A with their tax return. However, victims who claim the standard deduction may still be able to deduct their losses if they can claim them as business losses on Schedule C.

The deduction can be claimed on either a 2019 tax year return or a 2020 return (which is due next year). In either case, you must write the FEMA declaration number on the return claiming the deduction. For the August wildfires, the number is 4558. For the September fires, it's 4569. Also write "California Wildfires" in bold letters at the top of the form.

If you decide to claim a deduction for 2019 and you have already filed your 2019 return, you can amend your 2019 return by filing Form 1040X. For this purpose, you must file your amended prior-year return no later than six months after the due date for filing your current-year return (without extensions) for the year in which the loss took place. So, for California wildfire losses, you would need to file an amended 2019 return by October 15, 2021.

For more information on tax help available to people impacted by natural disasters, see Tax Relief for Hurricane, Wildfire, Flood and Other Natural Disaster Victims.

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