California Wildfire Victims Have More Time to File

The severe Southern California wildfires that ravaged homes and businesses in October 2007 affected thousands of individuals. Those living in the Presidential Disaster Area, comprised of Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, and Ventura counties, and those with businesses located in these counties have more time to file IRS forms and pay certain taxes.

Filing deadline

Individuals who reside in or have a business located in this disaster area have until January 31, 2008, to file returns and pay taxes that were otherwise due on or after October 21, 2007, and on or before January 31, 2008. These include:

• Fourth installment of 2007 estimated tax (otherwise due on January 15, 2008).
• Employer quarterly tax return for the third quarter (normally due on October 31, 2007).

When filing these returns and paying taxes, there is no need to identify yourself as a disaster victim; the IRS computers know this by your address. If you are outside the area but believe you qualify for relief (i.e., your tax professional is located within the disaster area), call the IRS disaster hotline at 866-562-5227.

Penalty relief. If you receive a penalty notice from the IRS, call the number on the notice to ask for relief from late filing interest and penalties. The IRS has agreed to waive failure to deposit penalties for employment and excise taxes due on or after October 21, 2007, and on or before November 5, 2007, if these deposits are made by November 5, 2007.

Disaster losses

Those who suffered losses in excess of any insurance recovery may be eligible for a tax deduction that can produce an immediate cash refund. Instead of claiming a casualty loss deduction, eligible individuals can opt to claim the deduction on a 2006 return. Doing this, by filing an amended return with "California Wildfires" at the top of Form 1040X for 2006 can usually produce a tax refund. However, those who do not need the cash immediately may wish to claim the loss on a 2007 return if it produces a greater overall tax benefit.