GALLAGHER: VICTIMS OF 2005 HURRICANES URGED TO TAKE ADVANTAGE OF SPECIAL TAX RELIEF
Nearly 116,000 Floridians Could Also Be Owed $162 Million In Refunds From 2002
TALLAHASSEE – Tom Gallagher, Florida’s chief financial officer, urged Floridians victimized by the 2005 hurricanes to make sure they are not missing out on favorable tax treatment for lost or damaged property. Free tax assistance is now available to determine if hurricane victims have a qualifying tax loss along with assistance preparing their tax returns. The program is available to those impacted by Hurricanes Katrina, Rita or Wilma.
“I’m urging hurricane victims to take advantage of every tax benefit available to help them rebuild their lives and homes, and improve their finances,” said Gallagher. “Tax benefits available this year could help Florida families at every income level.”
Volunteers at the IRS’s Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites are now able to refer hurricane victims with relatively complex tax issues to participating members of the American Institute of Certified Public Accountants (AICPA) or the American Association of Attorney-Certified Public Accountants (AAA-CPA) for free assistance preparing tax returns.
The VITA and TCE sites originally were only staffed to help low-income and elderly Floridians prepare simple tax forms. This assistance has now been expanded to also help hurricane victims determine if they have casualty losses or to amend prior returns. To find the nearest VITA/TCE site call 1-800-829-1040.
Gallagher reminded victims of Hurricanes Katrina, Rita or Wilma wishing to claim disaster-related losses on their 2004-year federal income tax returns that they will have until October 16, 2006, to make this choice rather than the original April 17th deadline. “Often declaring losses on the prior year’s return can lead to a larger deduction,” he said.
Unreimbursed property losses caused by the hurricanes can be claimed on either 2004 or 2005 tax returns. Eligible losses include but are not limited to insurance deductibles, spoiled food caused by a power outage, or trees and landscaping that were replaced. Losses to homes, automobiles or property that were not fully covered by insurance may qualify for special tax treatment.
Other options that could result in a larger tax refund are special rules for victims of Hurricanes Katrina, Rita and Wilma that will ease the eligibility requirements for the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC).
Hurricane victims who made withdrawals from their retirement programs to pay for storm losses may be eligible for special treatment by the IRS, including waiving early withdrawal taxes. There is also a temporary suspension of limits on qualified charitable contributions made between August 28, 2005, and the end of 2005.
Gallagher said a tax break is available to Good Samaritans who took in victims of Hurricane Katrina for at least 60 days. A $500 exemption is available for each guest, up to a maximum of $2000.
Gallagher also encouraged Floridians to make sure they are not missing an opportunity to collect refunds on their 2002 federal taxes. To be eligible to collect these unclaimed refunds a 2002 tax return must be filed with an IRS office no later than April 17, 2006.
“Approximately 116,000 Floridians are eligible for unclaimed refunds on their 2002 federal taxes,” said Gallagher. “That’s $162 million that is sitting in the U.S. Treasury rather than working here in Florida boosting our economy.”
Many of the people who are due a refund had taxes withheld from their wages or paid tax on self-employed earnings, or had too little income to require them to file a return. There is no penalty on late- filed returns that are due a refund.
The IRS has issued a publication explaining changes to the tax law and relief provisions available to those affected by Hurricanes Katrina, Rita and Wilma. Floridians can access Publication 4492 by logging on to www.irs.gov or find it where IRS forms are distributed. The IRS has also set up a special help line to assist hurricane victims at 1-866-562-5227.