Tax relief for S.C. flood victims

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The Internal Revenue Service has announced some tax help for residents of South Carolina who are digging out of the massive floods across the state.

Several counties have been declared major disaster areas by President Barack Obama. They are Berkeley, Charleston, Clarendon, Dorchester, Georgetown, Horry, Lexington, Orangeburg, Richland, Sumter and Williamsburg counties.

Individuals who live in or have a business in these counties may qualify for special tax relief.

And if your area isn’t in the disaster area, stay tuned. The recovery process is just getting underway and it’s possible that as more assessments come in from the Federal Emergency Management Agency, or FEMA, other locations may be added in coming days.

Amending prior-year returns

The key relief is the option of claiming qualifying flood losses on 2014 tax returns. Affected South Carolinians who have already filed last year’s taxes can amend that return to include the recent damages. Doing so may mean a tax refund, which storm victims can get now to help them pay for repairs.

If you do claim the disaster loss on last year’s return, the IRS asks you to write “South Carolina, Severe Storms and Flooding” at the top of the form. Remember, amended returns cannot be e-filed. The IRS says the notation will help it expedite the processing of your refund.

Also, if you need copies of previous returns in order to amend your taxes in connection with the flooding, the IRS will waive its usual fees and do its best to quickly process requests for that old paperwork.

If, however, you are a South Carolina taxpayer who chooses to claim storm and flood damages on your 2015 tax return when you file it next year, that’s fine.

The key is to look at which option — filing an amended 2014 return or waiting until next filing season — provides a better tax result and then use that one.

Oct. 15 deadline pushed to February

As for 2014 returns that have yet to be filed and are due Oct. 15, the IRS is giving taxpayers who put off this tax task even more time. Those extended 2014 taxes now are not due until Feb. 16, 2016.

In addition, the IRS is waiving its normal failure-to-deposit penalties for businesses that were unable to meet employment and excise tax deposits that were due Oct. 1. As long as companies make these tax deposits by Oct. 16, they won’t be penalized.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But if you live or have a business outside the disaster zone and believe you also are eligible for special tax relief, call the IRS’ toll-free disaster hotline at (866) 562-5227 to request the special flood tax treatment.

And I’ll offer one more bit of advice: Be careful out there. Major disasters can be treacherous, even after Mother Nature has cleared the area.

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