Who Qualifies for IRS Tax Relief Until Feb 2025?

If you're a tax pro, you already know that juggling IRS deadlines is tough enough on a normal day. But what do you do when Mother Nature decides to throw a curveball into your finely-tuned schedule? For those of you managing clients in Minnesota, the Carolinas, Florida, or Georgia, the IRS has just rolled out some critical updates you’ll need to stay on top of. 

Did Tax Season Just Get a Little Easier? 

Let’s face it—tax season is always a grind. But this year, the IRS has recognized that some of us are dealing with more than just numbers. If your clients were affected by the severe storms and flooding in Minnesota starting June 16, 2024, or Hurricane Debby in the Carolinas, Florida, and Georgia, they’ve just been granted a significant reprieve: the IRS is pushing back key filing deadlines to February 3, 2025. 

This extension isn’t just a small gesture; it’s a lifeline for professionals who are juggling client needs while dealing with the aftermath of these disasters. It gives you breathing room to manage your workload without the added stress of imminent tax deadlines. So, what exactly does this mean for you and your clients? 

The New Tax Filing Frontier

In Minnesota, the IRS is offering relief to those in 25 counties affected by the June storms and flooding. If you’re handling accounts in counties like Blue Earth, Carver, or St. Louis, this extension applies. Similarly, in South Carolina and neighboring states like North Carolina, Georgia, and Florida, anyone affected by Hurricane Debby has also been granted this extension. 

So, what’s the deal? If you or your clients have tax returns or payments due between June 16, 2024, and February 3, 2025, you’ve now got extra time to file and pay. This includes: 

• 2023 federal income tax returns: If your client filed for an extension, that return, normally due in October 2024, now isn’t due until February 2025. 
• Quarterly estimated tax payments: Payments due on September 16, 2024, and January 15, 2025, can be postponed until February 2025. 
• Quarterly payroll and excise tax returns: These typically due on October 31, 2024, and January 31, 2025, are also covered.

This relief can be a turning point, especially if your clients are small business owners trying to recover from the physical and financial impact of these disasters. But, of course, there’s always a bit of fine print. 

Not All Extensions Are Created Equal. Here’s where it gets tricky. While the IRS has extended the filing deadlines, any tax payments that were due before the disasters struck aren’t eligible for this extension. So, if your client missed a payment that was due last spring, they’ll still need to handle that separately. It’s crucial to communicate this to your clients to avoid any unexpected penalties down the line. 

What If Your Client Isn’t in the Disaster Area?

Tax professionals know that clients aren’t always where their records are. The IRS has thought of that too. If your client’s records are in a disaster area, but they’re located elsewhere, they still qualify for the same relief. The key is to contact the IRS directly to explain the situation—don’t wait for penalties to pile up. And if you’re managing multiple clients, the IRS has provided a bulk request option for tax professionals to streamline the process. This could be a lifesaver if you’re juggling multiple disaster-affected clients. 

Claiming Disaster Losses: A Strategic Tax Move

Let’s switch gears and talk about something that could potentially benefit your clients in a big way: disaster-related losses. If your clients suffered uninsured or unreimbursed losses due to these disasters, they have a choice—they can either claim these losses on their 2024 return or go back and claim them on their 2023 return. This flexibility can provide significant tax savings, especially for clients who have experienced substantial property damage. 

Imagine a client who owns a shop in South Carolina that was hit by Hurricane Debby. They lost equipment and suffered building damage. By claiming those losses on their 2023 return, they could potentially offset income from that year, reducing their overall tax liability. This isn’t just about filing a return; it’s about strategically positioning your clients to maximize their benefits. 

Special Considerations for Disaster Relief

For your clients with retirement plans, there’s even more good news. The IRS is allowing for special disaster distributions from retirement accounts. These distributions won’t be hit with the usual 10% early withdrawal tax, and clients can spread the income from these withdrawals over three years. This can be particularly useful for clients who need immediate access to funds but want to minimize the tax impact. 

If your clients are considering this option, remind them to check their specific plan rules. Each retirement plan has its own set of guidelines and ensuring that all requirements are met will save headaches (and penalties) down the road. 

Resources for Tax Professionals

Even seasoned tax pros need a hand sometimes. The IRS has set up various resources to help navigate these disaster-related tax challenges. For clients with incomes under $79,000, Free File software is available, and there are also specialized programs like MilTax for military members and some veterans. 

But let’s be real—this isn’t just about filing taxes; it’s about providing value to your clients during a tough time. Offering them strategic advice on how to handle their tax situation post-disaster not only reinforces your role as their trusted advisor but also helps them navigate through a challenging period with confidence. 

The Bottom Line: Stay Ahead of the Curve

In the world of tax, deadlines are king. But when disaster strikes, it’s up to professionals like you to help your clients stay compliant while also managing the fallout. The IRS’s extended deadlines for those affected by the storms in Minnesota and Hurricane Debby in South Carolina are a critical relief, but it’s your expertise that will help clients truly benefit from this extension. 

So, as you plan out the next few months, keep these updates in mind. Stay proactive, communicate with your clients, and use this extra time wisely. Because when February 3, 2025, rolls around, you’ll want to ensure that both you and your clients are not just meeting deadlines but optimizing every tax-saving opportunity along the way. After all, in the tax world, it’s all about staying one step ahead—no matter what Mother Nature throws your way. Stay tuned for more updates, and don't forget to subscribe to our newsletter! 📧