TaxWatch: The IRS is stretching out penalty relief for Hurricane Ian victims who still need to file overdue 2019, 2020 tax returns

by | Oct 21, 2022 | Stock Market

Hurricane Ian victims in Florida, North Carolina and South Carolina are still trying to get their bearings after last month’s epic wind, water and flooding caused billions of dollars in damage. While the recovery process continues, the Internal Revenue Service said this week it’s adding extra time and penalty relief connected to overdue 2019 and 2020 income taxes.

Taxpayers who still hadn’t filed these returns were facing a Sept. 30 deadline to submit them and sidestep a penalty. Many people eligible for the penalty relief had already turned in their returns before the IRS’s late August announcement. The IRS this week said Hurricane Ian victims — and other people trying to bounce back from recent natural disasters like Hurricane Fiona in Puerto Rico — now have through Feb. 15 to file the 2019 and 2020 returns to bypass the penalty. (They would still be subject to failure-to-pay penalties and interest, but the failure-to-file penalty is more costly.) The IRS already pushed back the filing deadline for Hurricane Ian victims who previously received an extension on their 2021 income taxes. Instead of an Oct. 17 deadline, these households and businesses now have a Feb. 15 deadline. Tax deadlines may be the least of headaches for Hurricane Ian victims who now have to navigate the insurance claims process. Insured losses from Hurricane Ian could range between $35 billion and $55 billion, according to Fitch Ratings estimates. That could be second behind the insurance toll from Hurricane Katrina of 2005, it noted. In 2021 dollars, the insured losses during the 2005 hurricane came to $90 billion, according to the ratings firm.

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