Ensure your clients have a financial safety net if a disaster strikes

After a natural disaster, having access to personal financial, insurance, medical, and other records can help people start the recovery process quickly. There are a few things taxpayers can do to help protect their financial safety in a disaster situation.

Update emergency plans. A disaster can strike at any time. Personal and business situations are constantly evolving, so taxpayers should review their emergency plans annually.

Create electronic copies of documents. Taxpayers should keep documents in a safe place. This includes bank statements, tax returns, and insurance policies. This is especially easy now since many financial institutions provide statements and documents electronically. If original documents are available only on paper, taxpayers can use a scanner and save them on a USB flash drive, CD, or in the cloud.

Document valuables. Documenting valuables by taking pictures or videoing them before a disaster strikes makes it easier to claim insurance and tax benefits, if necessary. IRS.gov has a disaster loss workbook that can help taxpayers compile a room-by-room list of belongings.

Understand tax relief is available in disaster situations. Information on Disaster Assistance and Emergency Relief for Individuals and Businesses is available at IRS.gov. Taxpayers should also review the itemized deduction for casualty and theft losses. Net personal casualty and theft losses are deductible only to the extent they’re attributable to a federally declared disaster. Claims must include the FEMA code assigned to the disaster.

Taxpayers who live in a federally declared disaster, can visit Around the Nation on IRS.gov and click on their state to review the available disaster tax relief. Those who live in counties qualifying for disaster relief receive automatic filing and payment extensions for many currently due tax forms and don’t need to contact the agency to get relief. People with disaster-related questions can call the IRS at 866-562-5227 to speak with an IRS specialist trained to handle disaster issues. They can request copies of previously filed tax returns and attachments by filing Form 4506, Request for Order of Tax Return; order transcripts showing most line items through Get Transcript on IRS.gov; or call 800-908-9946 for transcripts.

While personal or business property may have been destroyed, all hope is not lost. Here are some steps that can help your clients reconstruct important records.

Tax records:

• Get free tax return transcripts immediately using Get Transcript on IRS.gov.
• Order transcripts by calling 800-908-9946 and following the prompts.

Financial statements. People can gather past statements from their credit card company or bank. These records may be available online. People can also contact their bank to get paper copies of these statements.

Property records:

• To get documents related to property, homeowners can contact the title company, escrow company, or bank that handled the purchase of their home or other property.
• Taxpayers who made home improvements can get in touch with the contractors who did the work, and ask for statements to verify the work and cost. They can also get written descriptions from friends and relatives who saw the house before and after any improvements.
• For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, taxpayers can contact the attorney who handled the trust.
• When no other records are available, people should check the county assessor’s office for old records that might address the value of the property.
• Car owners can research the current fair-market value for most vehicles. Resources are available online and at most libraries. These include Kelley’s Blue Book, the National Automobile Dealers Association, and Edmunds.

Editor’s note: This article was originally published on Aug. 19, 2021, and republished with additional content on Aug. 27, 2021.