IRS Disaster Relief for Texans
Summary: The president has declared Texas as a federal disaster area. In turn, the IRS has postponed certain deadlines for taxpayers who reside or have a business in these areas.
Texas Disaster Relief Notice (TX-2021-02); Code Sec. 7508A
The president has declared all 254 Texas counties a federal disaster area. Similar to the previous disaster areas (see Louisiana and California), this comes with various tax incentives you might want to be aware of.
Texas Filing Deadlines Extended
The IRS extended certain deadlines falling on or after February 11, 2021, and before June 15, 2021, to June 15, 2021. The extension includes filing for most returns, including:
individual, corporate, estate and trust income tax returns;
partnership and S corporation income tax returns;
estate, gift and generation-skipping transfer tax returns;
the Form 5500 series returns,
annual information returns of tax-exempt organizations, and
employment and certain excise tax returns.
It is important to note that the extension does not apply to information returns (Form W-2, 1094, 1095, 1097, 1098, or 1099 series or Forms 1042-S, 3921, 3922 or 8027).
Texas Payment Deadlines Extended
The relief allows taxpayers extra time to make tax payments. This includes estimated tax payments due on or after February 11 and before June 15, 2021. Additionally, taxpayers have until June 15 to perform other time-sensitive actions due on or after February 11 and before June 15.
The IRS will excuse late penalties for employment and excise tax deposits due on or after February 11 and before February 26 only if the taxpayer must make the deposits by February 26.
Affected taxpayers can claim disaster-related casualty losses on their 2020 or 2021 federal income tax return. Thus, taxpayers can seek relief sooner if they choose to deduct the property losses on their 2020 tax return. Individuals may deduct personal property losses not covered by insurance or other reimbursements (FEMA). We recommend taxpayers claiming a disaster loss on their 2020 return should write the disaster designation: "Texas – Severe Winter Storms" at the top of the return. This will allow the IRS to speed refund processing.
For taxpayers who are unable to have their tax return transcripts pull online or through an agent, the IRS will provide affected taxpayers with copies of prior year returns without charge. To get this expedited service, taxpayers should: (1) add the disaster designation at the top of Form 4506, Request for a Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, and (2) submit it to the IRS.
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