Stay One Step Ahead: Safeguard Your Records Before the Unexpected Hits

You can’t predict when disaster will strike, but you can prepare for it. With a focus on National Preparedness Month, the IRS knows that when nature throws a curveball, the last thing you need is to be caught off guard financially. That’s why they’re urging everyone to get their tax documents and other records in order.

Let’s dive into how you can be ready, no matter what’s brewing in the forecast.

Start Now

Everyone—from individuals to businesses—can start now by:

• Securing and duplicating essential tax and financial documents
• Creating lists of property
• Knowing where to find information once a disaster occurs
  

Why is Preparedness Important?

In the aftermath of a disaster, if you have updated documents and other information readily available, you can apply for relief available from the IRS and other agencies.

Disaster assistance and emergency relief may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area.

Keep Original Documents Secure

Taxpayers should keep critical original documents inside waterproof containers in a secure space, including:

• Tax returns
• Birth certificates
• Deeds
• Titles
• Insurance policies

In addition, consider having a relative, friend or other trusted person retain duplicate copies of these documents at a location outside the potentially impacted disaster area.

Make Digital Copies

Consider scanning original paper documents into a digital file format. Saving them in a secure digital location, like a cloud-based storage application, can provide added security and portability.

Keep Inventory of Valuables

Document and maintain a detailed inventory of your property and business contents. Taxpayers can take photos or videos to record their possessions and should also write down descriptions, including year, make and model numbers. After a disaster, this information can help support claims for insurance or tax benefits.

Quick Reference Guide: Essential Steps to Safeguard your Records

• Secure and Backup Documents: Store originals in waterproof containers and save digital copies in the cloud.
• Document Property: Keep a detailed inventory of valuable possessions with descriptions and photos.
• Stay Informed: Know where to access IRS resources and local emergency contacts.
• Understand Relief Options: Be aware of IRS disaster relief and reconstruction resources.

Know How to Reconstruct Records

After a disaster, you may need to reconstruct records for tax purposes, getting federal assistance or insurance reimbursement. Keep in mind that most financial institutions can provide statements and documents electronically, which can help you in the reconstruction process. For tips, visit IRS’s Reconstructing Records.

Disaster Tax Relief

Following a federal disaster declaration, your area may be eligible for IRS tax relief, which can include postponed IRS filing or payment deadlines. The IRS identifies taxpayers located inside the covered disaster area and automatically applies filing and payment relief. This means that if your IRS address of record is located in the disaster area, you don’t need to contact the IRS to get disaster tax relief. Even if you live outside the disaster area, you may also qualify for relief.

In addition, a special rule allows both individuals and businesses to choose to deduct uninsured or unreimbursed disaster losses on either the tax return for the year the disaster occurred, or the return for the previous year. For more information, see Publication 547, Casualties, Disasters, and Thefts.

Employer Considerations

Employers using payroll service providers should check if their provider has a fiduciary bond in place to protect the employer against a possible provider default.

Most employers already use the Electronic Federal Tax Payment System (EFTPS) to make their federal tax deposits and business tax payments. EFTPS is a convenient option when a disaster displaces businesses and their employees. It’s also easy to track tax payments and receive email alerts through EFTPS.

Weather the Storm with Confidence

While we can’t stop natural disasters, we can certainly ease their financial impact. By organizing your essential documents, maintaining a detailed property inventory, and staying informed about disaster relief options, you’ll be better equipped to handle any challenges that come your way.

Whether it’s a hurricane or a flash flood, being financially prepared can help you focus on what matters most—keeping yourself and your loved ones safe.

Resources

• Find more resources on Disaster Preparedness at, visit Ready.gov/September.
• For a list of localities qualifying for relief and details on relief available, visit the IRS Tax Relief in Disaster Situations webpage.
• View the IRS disaster-loss workbooks for individuals and businesses compile lists of belongings or business equipment.