Don't let your tax records be gone with the wind!
Two little words strike fear in the heart of all beach-loving Tar Heels. No, we don’t mean “Shark Week;” we’re talking about Hurricane Season. And unfortunately, not even the mountain region of our beautiful state is immune from the ravages of these monster storms that occasionally come ashore here. Before a hurricane or other disaster strikes, it’s wise to take a little time to make sure you are prepared. While great guides exist to help you prepare emergency kits and plans, don’t forget to take a few minutes to make sure your tax information is protected from Mother Nature.
An easy first step in securing your important information is to go paperless. By electing to have bank account and other financial statements delivered electronically, you can easily keep digital copies of these records. Scanning and storing prior years’ tax returns (remember that keeping them at least 6 years is good practice) and their supporting documents in digital form can protect this vital information from being lost as the result of a hurricane or other disaster.
Other essential paperwork that you should consider keeping digitally includes closing statements for the purchase of your home, mortgage documents, inventories of your belongings, school records, and insurance policies. Of course, it’s critical to back up your files on a regular basis and to keep the backups in a secure location. With the convenience of cloud storage, this is simple to accomplish.
We’re not just talking about personal documents here; it is equally important for business owners to secure any business records that could be at risk during a natural disaster. Obviously, it is necessary for businesses to maintain proper security protocols as they back up employee and customer data.
Sometimes even the best plans can’t prevent the loss of important records. Taxpayers who need information from previously filed tax returns may be able to find what they need through the IRS’s free transcript service. If a full copy of a prior year tax return is necessary, it will cost you $50 (hence the suggestion to keep digital copies!).
When disasters affect large areas, Congress often acts to provide extended due dates for tax related matters. For example, Hurricane Matthew hit North Carolina early in October of 2016, just before the deadline for extensions that were filed in April of that year. Taxpayers living in many of the hardest hit counties were given five additional months to file their 2016 returns. Last year, tax relief was made available for people impacted by Hurricanes Irma and Maria and the California wildfires.
Other ways Congress and the IRS have helped in the aftermath of catastrophes include special provisions for taking casualty losses on prior year returns to get expedited refunds and working with taxpayers who are in danger of defaulting on their installment agreements due to losing income during a crisis. Anyone who is affected by a disaster should check with their tax professional to see if any assistance is available to them.
While we all hope that no hurricanes or other natural disasters will strike our beautiful state, it is always best to be prepared. The safekeeping of your important tax-related data needs to be part of your emergency plan. After all, you never know when you might be hit by a sharknado!