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Experts Discuss the Tax Planning Options Available to Businesses Affected by Hurricanes or Other Natural Disasters

Experts Discuss the Tax Planning Options Available to Businesses Affected by Hurricanes or Other Natural Disasters

The 2017 Atlantic hurricane season wasn't just extremely hyperactive -- it was also one of the most deadly and destructive on record. It not only featured 17 named storms, but it actually came in as the fifth most destructive season since we began keeping records in 1851.

If you're a business owner that operates in one of the many, many areas affected by these storms or the California wildfires, you're probably still in the middle of the recovery process despite the fact that tax season is upon us. Perhaps the most important thing for you to understand is that you should try your best to remain calm, as you certainly have a wide range of options available for you to explore in terms of tax planning options in particular.

Mother Nature and Taxes: What You Need to Know

Darvincia Warren of DW Tax Preparation, for example, stated very simply that "hurricane victims can prepare to deduct losses in the preceding year." Peter W. Flournoy, CPA expanded on that idea a bit, saying that "for those impacted by hurricanes or natural disasters, one of the most critical tax planning or compliance needs they have will be to quantify and document any casualty losses incurred."

He added, "It may also be possible to claim such losses currently, as opposed to waiting to file your 2017 tax returns."

Both experts agreed that a key step to take in the short-term involves becoming familiar with the extended due dates and deadlines provided to those impacted, as those will dictate how you proceed over the next few weeks and months.

A Literal Disaster Area

Another important thing to consider has to do with not just being impacted by a natural disaster, but what happens if the area that your business is operating in is literally declared a disaster area by the United States government. Ray Flatland of Lodestar Tax and Accounting expanded on this idea, saying that "if the Federal Government has declared an area to be a disaster area AND if you suffer a loss in the declared area, you can deduct that loss in the current year or even the prior year depending on which year produces the greatest tax benefit."

Even this, however, brings with it a number of considerations that you'll want to discuss very carefully with your accountant. Flatland continued: "Determining which year is more beneficial takes a careful look at both years, with a special attention on potential Net Operating Loss. Don't forget that you have until six months after the original due date of the 2017 return to claim the loss on your 2016 return."

You have a lot to worry about in the immediate aftermath of a hurricane or other natural disaster, but stressing out over your taxes doesn't have to be high on this list, at least in the short-term. Keep in mind that businesses affected in an official disaster area have until January 31, 2018 to file tax returns and make some payments. Be sure to put that date on your calendar now so you know exactly what you're working towards.

Lee Reams II, writes for TaxBuzz, a tax news and advice website. Reach him at [email protected] or on LinkedIn.

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Lee Reams II

Lee Reams II

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I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.

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