Unfortunately, when there is a natural disaster, taxpayers often times lose major tax write-offs, mostly because they don't remember a lot of their small to medium size deductions after hard copies of transactions are lost in a natural disaster.
It's a major event when mother nature intrudes into your life and takes the roof off your home, or the flood waters rise to your knees in a place you always thought of as safe and comforting. When tax season comes, remembering each and every little deductions becomes secondary in your life. This is unfortunate because taxpayers who are recovering from a natural disaster often times end-up with a distorted tax return.
The IRS says to keep your information on a CD or a DVD. The question is, what happens when the CDs or DVDs are loss in the natural disaster as well? The best solution, especially if you are a small business owner is to use an Online service like QuickBooks, or to have your computer files backed-up by an online service. You can also use a service like PayPal which will keep records for each and every transaction for you. PayPal even has credit cards (debit cards) for offline purchases.
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Below are suggestions from the IRS on how to keep your tax and financial records safe in case of a natural disaster.
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Hurricanes, tornadoes, floods and other natural disasters are more common in the summer. The IRS encourages you to take a few simple steps to protect your tax and financial records in case a disaster strikes.
Here are five tips from the IRS to help you protect your important records:
1. Backup Records Electronically. Keep an extra set of electronic records in a safe place away from where you store the originals. You can use an external hard drive, CD or DVD to store the most important records. You can take these with you to keep your copies safe. You may want to store items such as bank statements, tax returns and insurance policies.
2. Document Valuables. Take pictures or videotape the contents of your home or place of business. These may help you prove the value of your lost items for insurance claims and casualty loss deductions. Publication 584, Casualty, Disaster and Theft Loss Workbook, can help you determine your loss if a disaster strikes.
3. Update Emergency Plans. Review your emergency plans every year. You may need to update them if your personal or business situation changes.
4. Get Copies of Tax Returns or Transcripts. Visit IRS.gov to get Form 4506, Request for Copy of Tax Return, to replace lost or destroyed tax returns. If you just need information from your return, you can order a transcript online.
5. Count on the IRS. The IRS has a Disaster Hotline to help people with tax issues after a disaster. Call the IRS at 1-866-562-5227 to speak with a specialist trained to handle disaster-related tax issues.
