Articles & Alerts
Your Emergency Preparedness Plan – Be Sure to Include Financial Records and Tax Information
Creating an emergency preparedness plan is essential for households to effectively respond to disasters or emergencies. While it is essential to focus on physical safety and immediate needs, it is also important to consider the protection of financial records and tax information. By including these vital components in an emergency preparedness plan and updating them regularly, individuals can significantly expedite the recovery process if they find themselves affected by unforeseen circumstances. This article outlines several key steps taxpayers can take to safeguard their financial records and highlights the available resources to aid in emergency preparedness efforts.
Update the Emergency Preparedness Plan Annually
Given ever-evolving personal and business situations, taxpayers should review and update their emergency preparedness plan on an annual basis. The U.S. Department of Homeland Security’s Ready.gov website offers valuable resources and checklists to guide individuals in creating a comprehensive plan that addresses their specific needs. Taxpayers should be sure to confirm with their accountant and other key advisors that they have included all of the latest important information.
Create Electronic Copies of Important Documents
To ensure the safety of critical financial documents, taxpayers should store electronic copies in a secure location. Many financial institutions now provide statements and documents electronically, simplifying this process. In cases where original documents exist only in hard copy, individuals can use a scanner to create digital backups saved on a USB flash drive or in the cloud. This measure ensures easy accessibility and protection against potential loss or damage.
In preparation for potential disasters, taxpayers should consider documenting their valuable possessions through photographs or videos. This proactive step simplifies the insurance claims process and assists in maximizing potential tax benefits. The Internal Revenue Service (IRS) offers a disaster loss workbook available on IRS.gov, aiding taxpayers in creating a detailed inventory of their belongings on a room-by-room basis.
Understand Tax Relief for Disaster Situations
The IRS provides crucial information on Disaster Assistance and Emergency Relief for Individuals and Businesses on its official website. Taxpayers should consult Publication 547, which offers comprehensive guidance on handling casualties, disasters, and thefts. Individuals residing in federally declared disaster areas can visit the “Around the Nation” section on IRS.gov and select their respective state to access specific disaster tax relief information. Furthermore, taxpayers residing in qualifying counties for disaster relief may automatically receive filing and payment postponements for eligible tax returns, eliminating the need for direct contact with the agency. In addition, taxpayers can consult their accountant regarding eligibility.
Seek Assistance and Obtain Lost Documents
For taxpayers seeking assistance with disaster-related inquiries, the IRS Special Services Hotline (866-562-5227) connects them with trained specialists proficient in addressing disaster-related issues. In cases where tax documents have been lost, individuals can request tax transcripts or copies of previously filed tax returns and attachments through the Get Transcript feature on IRS.gov. Alternatively, they can file Form 4506 or contact the IRS at 800-908-9946 for further guidance. Taxpayers should work with their accountant and attorney for guidance.
Including financial records and tax information in an emergency preparedness plan is a valuable step for individuals to protect their assets and expedite the recovery process in times of disaster or emergency. By following the suggested measures, taxpayers can safeguard their vital documents, understand available tax relief options, and ensure smooth access to important financial information. To gain further insights and personalized guidance regarding their specific circumstances, contact your Anchin Relationship Partner or Elizabeth Morin, a tax director in Anchin’s Private Client group.