Protect Your Tax Records Before the Peak of Hurricane Season
We are entering into the peak of hurricane season, and among so many things to prepare for, it’s important for taxpayers to protect their tax records and key documents.
After a natural disaster, reconstructing records could be required for tax purposes, federal assistance, or insurance reimbursement. Taking a few proactive steps to protect tax and financial documents and other important paperwork can help to lessen frustration and potential hardship after a storm.
Protect Vital Records, Tax And Financial Documents
Whether you shelter in place or evacuate from a hurricane’s predicted path, you will want to secure some key documents. You should take extra care with paper documents by protecting them in plastic zippered bags inside a portable waterproof safe.
Key documents you will want to have on hand and protected:
- Social Security card
- Proof of residence (deed or lease)
- Insurance policies
- Birth certificates
There is no guaranteed safe place if you store documents in your home in the path of a hurricane. The crucial factor is to have documents in a truly waterproof container. Other documents to safeguard:
- Marriage certificates
- Tax records for previous and current tax years
- Titles, wills, and deeds
- Banking and financial statements
Use Electronic Records
The safest way to ensure an archive of your records is to duplicate them into electronic form. Scanning paper documents or downloading statements and policies from online accounts onto a flash drive or a portable storage hard drive would enable you to bring your files with you.
An alternative to a physical hard drive, storing electronic records in a cloud platform would mean access at any time with available internet; however, you will want to make sure any cloud storage is secure and has reliable backups.
IRS Revenue Proclamation 97-22: scanned receipts are acceptable as long as they are identical to the originals
Documents you may want to store electronically:
- Bank statements / financial documents downloaded from your financial institution
- Tax returns, W-2s and payroll records scanned into an electronic format (Read more on how many years of tax records you should keep.)
Document valuables and business equipment
Take some time to video or take pictures of all of your belongings, especially any higher value items/equipment. Photos or videos of personal items in your home or equipment in your business can provide proof for insurance claims and loss claims on tax returns.
In addition to insurance claims, you can also claim a deduction for casualty loss for property damaged from a disaster. Personal casualty deductions can only be claimed for losses attributable to a federally declared disasters. The casualty loss is reduced by the amount of insurance reimbursement or expected reimbursement.
To help individual taxpayers take a record of their property, the IRS provides a disaster loss workbook, Publication 584, Casualty,Disaster, and Theft LossWorkbook. (Use Form 4684 for Casualties and Thefts of personal property.)
Be Prepared And Stay Safe
We hope our clients stay safe from any severe weather events we may experience this season.
For help with your tax planning and income tax preparation, give us a call.