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Tax and Financial Relief for Victims of Hurricane Sandy

We hope that this newsletter finds you and your loved ones safe.  In the aftermath of Hurricane Sandy, we have devoted the October newsletter to a discussion of the tax and financial relief available to victims of the storm.

Tax Filing and Payment Relief at the Federal and State Level

Federal Relief

Federal tax return filings that were due between the start date of your disaster relief and January 15, 2013 are now due on February 1, 2013.  This includes the Federal third quarter payroll filings that were due October 31, 2012 and the fourth quarter payroll filings that are due January 31, 2013.  In addition, the fourth quarter estimated tax payments that are due January 15, 2013 are now due February 1, 2013.

The individuals and businesses in the following counties in New York, New Jersey, and Connecticut are eligible for Federal tax filing and payment relief:

In New York (starting Oct. 27): Bronx, Kings, Nassau, New York, Queens, Richmond, Rockland, Suffolk and Westchester.

In New Jersey (starting Oct. 26): Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean, Somerset and Union;

In Connecticut (starting Oct. 27): Fairfield, Middlesex, New Haven, and New London Counties and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London County;

Note: Eligibility for relief at the state level is subject to different criteria.  Please take note of the specific eligibility for each state below.

New York Relief

Tax deadlines beginning on October 26, 2012 and extending through November 14, 2012 have been extended to November 14, 2012.  This includes, but is not limited to the third quarter New York State Form NYS-45 ‘Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Tax Return’, and Form NYS-305 ‘Employer's Quarterly Metropolitan Commuter Transportation Mobility Tax Return’, which were due on October 31, 2012.  This relief includes victims of the storm who reside in or have a principal place of business in New York State, workers assisting in the relief efforts in the designated counties, and individuals whose tax practitioners are affected by the storm.

New Jersey Relief

The New Jersey tax filings due October 30 and 31st have been extended to November 7, 2012.  This includes Form NJ-927 Employer’s Quarterly Report.  Taxpayers affected include businesses located in the State, or out of state businesses with operations in New Jersey or tax records in New Jersey.

Connecticut Relief

Taxpayers who, as a direct result of the storm and related flooding, are unable to comply with Connecticut tax payment and/or filing obligations may be eligible for relief from penalty and interest that resulted from their noncompliance.  Affected individuals or companies will need to complete the Request for Relief – Storm Sandy (2012) form, available on the Department of Revenue Services website.

Financial Relief for Losses Incurred as a Result of the Storm

There are three avenues of relief available to storm victims.  These include tax relief, insurance reimbursement, and Federal aid.   All three types of aid will require good recordkeeping.  If records were damaged in the storm, it may be necessary to reconstruct your records.  The quality of your recordkeeping could directly impact the amount of casualty loss, insurance   reimbursement, or Federal aid that you receive.

Tax Relief

You are able to deduct a casualty loss from the storm damage on your individual income tax return if the loss after insurance reimbursement and Federal aid exceeds 10 percent of your adjusted gross income.  It is important to note that the deduction for the casualty loss for this storm is available for your 2011 or 2012 tax return, even if 2011 has already been filed.  The decision regarding which year to claim the loss is an important tax planning opportunity; we recommend you call us to discuss your specific situation.  

In order to compute your casualty loss, the following information will be required: 1) the decrease in fair market value of the property as a result of the casualty as determined by an independent appraisal and 2) the adjusted basis of the property (usually the cost of the property and improvements).

If you repair damage caused by the storm, or spend money related to clean up costs, it is important to keep all receipts.  While you cannot deduct these costs, you can use them as a measure of the decrease in fair market value caused by the casualty if the repairs are actually made, are not excessive, are necessary to bring the property back to its condition before the casualty, take care of the damage only, and do not cause the property to be worth more than before the casualty.

Below are some guidelines to document the damage to your property, whether residential, commercial, or personal property.

  • Take photos of the damage immediately 
  • Draw pictures of each room that was damaged and note where the personal furniture or business equipment was located, and what items   of personal property were on shelves.  This will help to itemize that property that was damaged.
  • Draw pictures of dressers and other pieces of furniture or equipment that were used to store personal items.  Use this as a memory tool  to list the property that was stored within these items.
  • If the damaged property is a business, obtain copies of bank statements.
  • List appliances that were damaged or destroyed, included year of purchase. 
  • Use old catalogs to document cost basis and fair market value of items that were destroyed.
  • Contact your credit card company for copies of statements that show purchases.
  • Obtain a copy of the most recent appraisal of your property to determine a recent fair market value.
  • Obtain records of improvements made to the property from contractors who were hired for the work.

Insurance Reimbursement

Contact your insurance company to determine the procedure for filing an insurance claim for the damage to your property. 

If you do not have sufficient insurance and as a result of the storm would like to discuss your situation with an insurance agent and obtain insurance for the future, please contact us.  We have valuable resources to assist you.

Federal Aid

Victims who have incurred losses from the storm can apply for financial aid.  Victims in all 21 counties in New Jersey are eligible.  Victims in the following counties in New York are eligible:  Bronx County, Kings County, Nassau County, New York County, Queens County, Richmond County, Rockland County, Suffolk County and Westchester County.  Victims in the following counties in Connecticut are eligible:  Fairfield County, Mashantucket Pequot Indian Reservation, Middlesex County, New Haven County and New London County.

The website to utilize to determine what types of Federal aid you may be eligible for is www.disasterassistance.gov.  Additionally, the phone number to reach FEMA is 1-800-621-3362 and the website is www.fema.gov.

You will need to have certain pieces of information handy when you apply for disaster relief.  

These include:

   • Social Security Number
If you are registering for a business, enter the social security number of the responsible party for the business, the social security number will be used for an identifier only.

   • Insurance information
You will be asked to identify the type(s) of insurance coverage you have. 

   • Financial information
You will be asked to enter your family's gross total household income at the time of the disaster. 

   • Contact information
Along with the address and phone number where the damages occurred, you will be asked for information on how FEMA can contact you. It is very important that you provide FEMA with your current mailing address and phone numbers where you can be contacted. 

   • Electronic Funds Transfer (EFT) Direct Deposit Information (optional)
This is necessary if you prefer that relief is directly deposited in your account.


                                              Other Relief Matters of Interest

The IRS announced that they will waive low-income housing tax credit rules that prohibit owners of low-income housing from providing housing to victims of Hurricane Sandy who do not qualify as low-income. The action will expand the availability of housing for disaster victims and their families.

Since Hurricane Sandy is designated as a qualified disaster for federal tax purposes, qualified disaster relief payments made to individuals by their employer or any person can be excluded from those individuals’ taxable income.

Qualified disaster relief payments include amounts to cover necessary personal, family, living or funeral expenses that were not covered by insurance. They also include expenses to repair or rehabilitate personal residences or repair or replace the contents to the extent that they were not covered by insurance. Again, these payments would not be included in the individual recipient’s gross income.

Please contact us with any questions that you may have.

Remember, we’re here for you!