9 Natural-Disaster Tax Breaks Everyone Should Know About

Natural disasters can wreak havoc on your life, causing damage to your property and disrupting your daily routine.

If you were affected by one of the many billion-dollar weather events in the last year or two, you're likely focused on rebuilding. But natural disasters can also impact your taxes.

Here's what you need to know about tax breaks that could help lower your financial stress after a disaster.

1. Was your area federally declared a natural disaster?

There were 114 natural disasters declared in the United States in 2023, with severe storms in California, wildfires in Hawaii, and hurricanes in Florida, among other events.

According to the National Centers for Environmental Information, as of September 10, 2024, there have been 20 confirmed weather and climate disasters in the U.S., with losses of over $1 billion each. Sadly, they still need to account for the devastation caused by Hurricane Helene, which hit later in the month.

You’ll need to confirm that you live in an area that was affected by a natural disaster to find out if there are any potential tax breaks or issues that can have an impact on your tax filing for 2024. You can go to FEMA's website to use your zip code and confirm that information.

2. Can you get a filing extension for your taxes?

The IRS usually offers tax-filing extensions to those living in areas affected by a natural disaster.

Flooding in 2023, for example, affected the states of Montana, North Dakota, South Dakota, and Minnesota in the days leading up to April 18, 2023, and the tax deadline for filing 2022 taxes. In these cases, the IRS postponed tax deadlines and rescheduled them for people in areas impacted by natural disasters.

On October 1, 2024, The IRS announced disaster tax relief will be given to all (individuals and businesses) affected by Hurricane Helene, including the entire states of Alabama, Georgia, North Carolina, and South Carolina and parts of Florida, Tennessee, and Virginia. Taxpayers in these areas now have until May 1, 2025.

3. What if you lost your tax returns?

A natural disaster can damage your property including your personal records and tax returns.

If you lose copies of previous tax returns due to a natural disaster, the IRS will waive the fees it usually charges taxpayers to get new copies of their returns.

This can help you rebuild your records or assist you in filling out your current returns based on historical tax information.

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4. Can you deduct losses after a natural disaster?

The IRS does allow you to deduct your losses after a natural disaster if you deduct them in the “disaster year” as part of disaster relief.

Check with the IRS or your accountant if you have questions about how to declare disaster relief to get tax credits or other tax breaks.

5. What if you pay your taxes in installments?

The IRS allows some taxpayers to pay their taxes in installments if necessary, which can be difficult during a natural disaster.

However, you can get some relief because the IRS will suspend tax installment payments for taxpayers who live in an affected area.

Be aware that the installment payments will only be suspended temporarily. If you are on a payment plan, you should talk to the IRS about suspending payments and understand when the agency expects those payments to resume.

6. What if your losses exceed an insurance payout?

It can be frustrating to make an insurance claim and find that your company doesn’t cover the full cost of your losses.

However, you can get some relief from the IRS by claiming the losses above what your insurance company will reimburse. To do so, you’ll need to fill out Form 4684.

7. Can you amend a return to account for a natural disaster?

You may want to file your return on time to get your refund quicker so you can pay for repairs after a natural disaster. Or you may not have the documents you need to claim your natural disaster expenses before the April 15 deadline for filing.

In cases like this, you can file an amended return after your original return to include money you had to spend because of a natural disaster or any additional information that can change your return.

8. Should you get a professional accountant to help you?

Plenty of Americans don’t have a professional accountant and file their taxes on their own. After all, it can be easy if you have a full-time job and few deductions.

But it might be a good time to consider getting a tax professional to help you file your forms if you experience a natural disaster.

A tax professional can help you navigate the additional paperwork and deductions or advise you on what qualifies and doesn’t qualify for natural disaster relief.

9. What if my tax professional is affected but I’m not?

You may have an accountant who works in an area hit by a natural disaster while you weren’t affected.

You can apply for a filing extension if your accountant or tax preparer is affected by a natural disaster and can't prepare your return.

If your tax preparer was affected, you should reach out to show concern and learn how they were affected by a disaster and what steps they’re taking to get you an extension as they deal with the repercussions of a disaster.

10. What if I was a relief worker?

While you may not live in an area hit by a natural disaster, you may have volunteered or served as a paid relief worker to help those affected. Rebuilding a community may take a long time.

Charitable workers, workers from government organizations, and other relief workers may be eligible for a filing extension if they went to the area to help but didn’t live in the area.

Check with the IRS to see if you qualify for an extension or other tax breaks even though you’re not a resident of the affected area.

Bottom line

Victims of a natural disaster may think they will never recover, but eventually, they do. In the meantime, there are some preventive measures you can take now to prepare for a disaster.

Having an emergency fund is a good place to start, and if you live in an area prone to disasters, you might try to find ways to supplement your income .

Money tips that can work for everyone

No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.

Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.

Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.

Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).