Taxpayers residing or doing business in Fairfield County and three others where torrential rain and flooding struck on August 18 have more time to file various federal tax returns and make tax payments, the Internal Revenue Service announced.

Deadlines are extended to February 3 for individuals and businesses in Fairfield, Litchfield, and New Haven counties to file returns and pay taxes that were originally due between August 18, 2024 and February 3, 2025. The same applies to Suffolk County in New York.

The full text of the IRS announcement appears below. As always, consult a tax advisor for specific applicability.

Disaster declaration, financial aid

Homeowners, businesses, and communities may receive direct financial assistance to deal with storm damage if a request for a major disaster declaration is granted by President Joe Biden. Governor Ned Lamont submitted the request on September 9.

Immediately after the storm, the president approved a federal emergency declaration for the affected counties, which enabled state agencies to coordinate with FEMA to draw on federal personnel and equipment.

A major disaster declaration would invoke the federal Individual Assistance Program, which reimburses homeowners and businesses for some costs of repairing damage to uninsured private property. In addition, a Public Assistance Program could reimburse the state and local governments for some costs of repairing damage to public property.

Qualifying for such a declaration requires meeting certain thresholds, and detailed, documented damage assessments must be submitted. This is why, a day after the storm, property owners were asked to provide estimates and documentation online as soon as possible.

Editor’s Note, September 20, 2024: Governor Lamont’s office announced today that President Biden approved his request for a major disaster declaration.

Damage assessments

Data for the Individual Assistance Program has been collected and vetted by FEMA and the Small Business Administration. In Weston, the agencies worked with Police Sergeant Joe Miceli, the town’s Emergency Management Director.

Sgt. Miceli told the Police Commission on September 3 that more than 80 Weston property owners had filed claims, some for major damage, some who had no flood insurance. He said the maximum amount individuals can receive from FEMA is $42,500.

If Governor Lamont’s request for a major disaster declaration is approved, Sgt. Miceli said a session will be held for people to present their claims and documentation. Those who did not file online still have 60 days after the declaration to submit claims.

Governor Lamont said preliminary damage assessments indicate that the storm destroyed 19 homes in Connecticut. He said 170 homes suffered major damage, an additional 133 were deemed inaccessible, 615 had minor damage (per FEMA guidelines), and an additional 1,049 homes were affected.

The governor said the SBA’s preliminary assessment found 77 businesses suffered major damage and 51 more received minor damage.

From the IRS …

IR-2024-234, September 10, 2024

WASHINGTON — The Internal Revenue Service announced today tax relief for individuals and businesses in Connecticut and New York affected by severe storms and flooding from torrential rainfalls that began on Aug. 18, 2024. Some communities in western Connecticut also experienced landslides and mudslides from these storms.

These taxpayers now have until Feb. 3, 2025, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA).

This means that individuals and households that reside or have a business in Suffolk County New York and in Fairfield, Litchfield, and New Haven counties in Connecticut qualify for tax relief.

The same relief will be available to any other counties added later to the disaster area. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred from Aug. 18, 2024, through Feb. 3, 2025 (postponement period). As a result, affected individuals and businesses will have until Feb. 3, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 3, 2025, deadline will now apply to:

• Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the storm occurred.
• Quarterly estimated income tax payments normally due on Sept. 16, 2024, and Jan. 15, 2025.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, and Jan. 31, 2025.

In addition, penalties for failing to make payroll and excise tax deposits due on or after Aug. 18, 2024, and before Sept. 3, 2024, will be abated, as long as the deposits were made by Sept. 3, 2024.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area.

Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. Tax preparers located in the disaster area with clients located outside the disaster area can choose to use the bulk requests from practitioners for disaster relief option, described on IRS.gov.

Additional tax relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year).

Taxpayers have extra time — up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) — to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number 3612-EM for Connecticut and 3613-EM for New York on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The IRS may provide additional disaster relief in the future.

The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Reminder about tax return preparation options

• Eligible individuals or families can get free help preparing their tax return at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites. To find the closest free tax help site, use the VITA Locator Tool or call 800-906-9887. Note that normally, VITA sites cannot help claim disaster losses.
• To find an AARP Tax-Aide site, use the AARP Site Locator Tool or call 888-227-7669.
• Any individual or family whose adjusted gross income (AGI) was $79,000 or less in 2023 can use IRS Free File’s guided tax software at no cost. There are products in English and Spanish.
• Another Free File option is Free File Fillable Forms. These are electronic federal tax forms, equivalent to a paper 1040 and are designed for taxpayers who are comfortable filling out IRS tax forms. Anyone, regardless of income, can use this option.
• MilTax, a Department of Defense program, offers free return preparation software and electronic filing for federal tax returns and up to three state income tax returns. It’s available for all military members and some veterans, with no income limit.

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