Home Energy Audit Tax Benefits

Article Highlights:

• Home Energy Improvements & Tax Credits
• Home Energy Audit
• Annual Credit Limit
• Non-Refundable Credit
• Improvement Category Limits
• $1,200 Annual Credit limit Improvements
• $2,000 Annual Credit limit Improvements
• Energy Property Qualifications

Have you been thinking of making home improvements? If so, and they include energy saving improvements, you may qualify for some substantial income tax credits.  Even if home improvements aren’t currently on your to-do list, with the increasing cost of energy you may find that energy saving home improvements, along with the tax credits that accompany them, are something you should be considering.

Don’t know where to begin? Perhaps a good starting point would be with a home energy audit that identifies the most significant and cost-effective energy efficiency improvements you could make with respect to your principal residence, including a written estimate of the energy and cost savings with respect to each improvement, allowing you to pick the ones that best serve your needs and finances. In addition, the tax code now includes a tax credit of 30% of the cost of a home energy audit performed by a qualified home energy auditor up to a credit of $150 per year. The home energy auditor is required to provide you a written audit report. This credit is in addition to the annual credit limit for the actual energy saving home improvements you make. You can search the internet for a qualified auditor in your area. 

For home energy audits in 2024 or a later year, you will need to substantiate that a qualified auditor conducted your home audit. To satisfy this requirement, the written audit should state that the auditor is certified by one of the certification programs listed on the Department of Energy certification programs for the Energy Efficient Home Improvement Credit page to conduct the home energy audit.

When making an energy saving home improvement that qualifies for a credit, keep in mind there are credit limits that you must consider to maximize your annual credit:

1. The annual credit limit is $1,200.  So, it may be appropriate to plan your home energy improvements over multiple years to maximize the tax credit. 
2. The improvement costs also have limits based on the category of the improvement. For example: Assume an energy efficient exterior window is one of your improvements and it costs $1,000.  The credit allowable expense for an exterior window is only $600.  Thus, the allowable credit for that window expense would be $180 (30% of $600).
3. The credit is non-refundable, meaning it can only reduce your tax liability to zero and there is no carryover of unused credits to a subsequent year. However, don’t confuse that with the fact that you are reducing your overall tax.  You can be receiving the benefit of the credit and still have a tax liability.      

The caps and categories of improvements under the annual $1,200 limitations are as follows: 

• $600 for any item of qualified energy property, that generally includes (this is not a complete list which only includes the more common improvements):

• • An electric or natural gas heat pump water heater.

• • An electric or natural gas heat pump.

• • A central air conditioner.

• • A natural gas, propane, or oil water heater, and

• • A natural gas, propane, or oil furnace or hot water boiler.

• $600 for exterior windows and skylights, 
• $250 for any single exterior door and $500 in the aggregate for all exterior doors.

Not subject to the annual $1,200 limit or the $600 per item limit and instead subject an aggregate annual limit of $2,000 are:

• heat pumps,
• heat pump water heaters, 
• biomass stoves, and 
• biomass boilers 

The tax code sets out the requirements that must be met for the energy property to qualify for the credit. A few examples: exterior doors must meet Energy Star requirements, windows and skylights must meet Energy Star most efficient certification requirements, and electric or natural gas water heaters must meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency (list available at CEE Directory | AHRI (ahrinet.org)) that is in effect as of the beginning of the year in which the property is placed in service A home energy auditor or the seller/installer of the property should be able to provide you with the details. Be sure to ask for and retain written material that confirms the energy property qualifies for the credit. . .just in case the IRS wants proof of eligibility.

Please contact this office for more information about qualifying improvements and assistance in timing your energy efficiency improvements to maximize the tax benefits.

 

Flash – IRS Provides Employers Way to Withdraw Dubious ERC Claims 

Article Highlights:

• Prior ERC Scam Warnings
• What is the ERC?
• IRS Shifting Focus 
• Latest Guidance for Withdrawing a Claim
• Who Can Withdraw a Claim Under the New Procedure
• Procedure for Withdrawing a Claim

Despite warnings from the IRS, the American Institute of CPAs, and other professional tax preparer societies, many business owners have fallen victim to aggressive marketing of the Employee Retention Credit (ERC) by marketers or promoters into filing ineligible claims.

As part of a larger effort to protect small businesses and organizations from scams, the IRS has announced the details of a special withdrawal process to help those who filed an ERC claim and are concerned about its accuracy. 

The ERC is a refundable payroll tax credit designed for businesses who continued paying employees while shut down due to the COVID-19 pandemic or who had significant declines in gross receipts from March 13, 2020, to Dec. 31, 2021. The ERC is a complex credit with precise requirements to help businesses during the pandemic, and since mid-September, the IRS has received approximately 3.6 million claims for the credit over the course of the program.

As we revealed in an earlier bulletin, In July, the IRS announced it was shifting its focus to review ERC claims for compliance concerns, including intensifying audit work and criminal investigations on promoters and businesses filing dubious claims. The IRS has hundreds of criminal cases being worked on, and thousands of ERC claims have been referred for audit. This was followed up on September 14^th with another announcement by the IRS of a moratorium on processing new claims while continuing to process claims prior to September 14^th at a slower pace with stricter compliance reviews in place.

The latest guidance from the IRS released on October 19 provides a procedure for withdrawing a claim. Employers can use this new ERC claim withdrawal process if ALL the following apply:

• The claim was made on an adjusted employment return (Forms 941-X, 943-X, 944-X, CT-1X).
• The adjusted return was filed only to claim the ERC, and made no other adjustments.
• The employer wants to withdraw the entire amount of their ERC claim.
• The IRS has not paid their claim, or the IRS has paid the claim, but the employer hasn’t cashed or deposited the refund check. 

To take advantage of this new claim withdrawal procedure, taxpayers should carefully follow the special instructions at IRS.gov/withdrawmyERC, summarized below.

• Taxpayers whose professional payroll company filed their ERC claim should consult with the payroll company. The payroll company may need to submit the withdrawal request for the taxpayer, depending on whether the taxpayer’s ERC claim was filed individually or batched with others.
• Taxpayers who filed their ERC claims themselves, haven’t received, cashed, or deposited a refund check and have not been notified their claim is under audit should fax withdrawal requests to the IRS using a computer or mobile device. The IRS has set up a special fax line to receive withdrawal requests. This enables the agency to stop processing before the refund is approved. Taxpayers who are unable to fax their withdrawal using a computer or mobile device can mail their request, but this will take longer for the IRS to receive.
• Employers who have been notified they are under audit can send the withdrawal request to the assigned examiner or respond to the audit notice if no examiner has been assigned.

Those who received a refund check, but haven’t cashed or deposited it, can still withdraw their claim. They should mail the voided check with their withdrawal request using the instructions at IRS.gov/withdrawmyERC.

If you have fallen victim to an ERC promoter or marketer and need assistance in determining if the claim is valid and what to do if not, should contact this office for assistance.  

 

IRS Announced a Novel Way for Taxpayers to Donate to Maui Wildfire Relief

Article Highlights:

• Donating unused vacation time, sick leave and personal time
• Employer’s Function 
• Great Donation Opportunity

As they have done before in the wake of disasters, including Hurricane Katrina, Superstorm Sandy, COVD-19, and Ukrainian relief, the Internal Revenue Service is allowing special contributions for Maui wildfire relief. It permits employees to donate their unused paid vacation, sick leave, and personal leave time to charities that are providing relief to victims of the Maui wildfire that began August 8, 2023.

It is referred to as leave-based donations and here is how it works: if your employer is participating, you can relinquish any unused and paid vacation time, sick leave and personal leave for cash payments which your employer will donate to relief charitable organizations. The cash payment will not be treated as wages to you and your employer can deduct the amount donated as a as charitable contribution under IRC Sec 162 or a business expense under IRC 170.

However, since the income isn’t taxable to you, you will not be allowed to claim the donation as a charitable deduction on your tax return. Even so, excluding income is often worth more as tax savings than a potential tax deduction, especially if you generally claim the standard deduction or you are subject to AGI-based limitations.

This special relief applies to all donations made before January 1, 2025, giving individuals over a year to forgo their unused paid vacation, sick and leave time and have the cash value donated to help those who lost everything including their homes, livelihood and even family in this devastating disaster.  

This is a great opportunity to provide sorely needed help in the aftermath of the wildfire without costing you anything but time. Contact your employer to see if they are participating, and if not, make them aware of the unique opportunity. They benefit by not having to pay payroll taxes on the cash equivalent of the donated time, so it is worth their time to participate. If your employer is unaware of his program refer them to IRS Notice 2023-69 for further details.      

If you are an employee or employer and have questions related to donating leave time for Maui relief efforts or other charitable contributions, please contact this office. 

 

Accountable Plans: A Win-Win for Employers and Employees

Article Highlights: 

• Accountable Plan
• Overcoming Tax Cuts and Jobs Act Limits
• Benefits From an Employers Point of View
• Benefits From an Employees Point of View
• IRS Criteria
• Basic Plan Wording 
• Plan Customization

As an employer or an employee one intricacy of tax laws and regulations that often goes unnoticed is the concept of Accountable Plans. These plans, when implemented correctly, can provide significant tax benefits for both employers and employees.

Under the Tax Cuts and Jobs Act (TCJA) signed into law by President Trump in 2017, the rules for deducting employee business expenses changed significantly. Prior to the TCJA, employees could potentially deduct unreimbursed business expenses as miscellaneous itemized deductions on their personal income tax returns.

However, for tax years 2018 through 2025, the TCJA suspended the ability for employees to deduct unreimbursed business expenses as an itemized deduction. This includes expenses such as local business transportation and away-from-home travel expenses.

An accountable plan provides a way around the TCJA deduction restrictions.  Accountable plans are reimbursement or allowance arrangements that meet the criteria set by the IRS. These plans allow employers to reimburse employees for business-related expenses without the reimbursement being considered taxable income. There are benefits for both employer and employee: 

• From an Employer’s Perspective – The benefits for employers are twofold. First, reimbursements under an Accountable Plan are not subject to payroll taxes. This means employers can save on their share of FICA (Social Security and Medicare) taxes, which can add up to substantial savings. Second, these reimbursements are deductible as business expenses, further reducing the company’s taxable income.
• From an Employee’s Perspective – For employees, reimbursements under an Accountable Plan are not considered taxable income. This means they do not have to report these reimbursements on their income tax returns. There’s also no FICA tax withholding for the reimbursement received by the employee. As a result there’s significant tax savings for employees, especially those who frequently incur business-related expenses.

However, to qualify for these benefits, the plan must meet three criteria set by the IRS:

1. Business Connection: The expenses must be incurred while performing services as an employee.
2. Substantiation: Employees must provide their employers with documentary evidence of these expenses within a reasonable time.
3. Returning Excess Amounts: If an allowance exceeds the substantiated expenses, the excess must be returned within a reasonable time.

Accountable Plans can be a win-win for both employers and employees. They provide a way for employers to reimburse employees for business-related expenses without increasing their tax liability. At the same time, employees can receive these reimbursements tax-free, leading to significant tax savings.

However, setting up and maintaining an Accountable Plan requires an understanding of IRS regulations. It’s crucial to ensure that the plan meets all IRS criteria to avoid potential tax penalties. Here’s a very basic example of what an accountable plan might look like:

                                     [Your Company Name] Accountable Plan

1. Purpose: This accountable plan is established to govern the reimbursement of business expenses incurred by employees on behalf of [Your Company Name]. The plan is intended to comply with all applicable IRS regulations.
2. Business Connection: Reimbursements are only made for expenses that are directly related to the business of [Your Company Name]. Employees must incur these expenses while performing services as an employee.
3. Substantiation: Employees must provide [Your Company Name] with detailed records of the expenses. This includes the amount, date, place, and business purpose of each expense. Employees must also provide receipts for any expenses over $75.
4. Returning Excess Reimbursements: If an employee receives an advance or an allowance for business expenses, they must return any amount in excess of the actual expenses within a reasonable period. [Your Company Name] defines a reasonable period as 60 days after the expense was paid or incurred.
5. Noncompliance: If an employee does not comply with the rules of this accountable plan, [Your Company Name] may include the amount of the reimbursement or allowance in the employee’s income.
6. Amendments and Termination: [Your Company Name] reserves the right to amend or terminate this accountable plan at any time.

Please note that this is a basic example and may not cover all the necessary specifics appropriate for your business. It is highly recommended additional detail such as the following be added: 

• Date the plan becomes effective.
• Type of expenses reimbursable under the plan.
• Extent to which supervisory approval of expenses is required.
• Cost limits applicable to the different types of expenses.
• Overall periodic limits on periodic reimbursable expenses.
• Time limits for submitting expense requests.
• The procedures for submitting requests.
• Required documentation by type of expense.
• How and when excess reimbursements must be returned. 
• If applicable, a list of preferred suppliers.

If you have more questions about Accountable Plans or need a consultation to customize your plan, please contact this office.   

 

Obscure and Overlooked Tax Deductions, Credits, and Benefits

Article Highlights:

• Low Income Year
• Limitation on Tax Itemized Deduction
• State Income Tax Refund
• Social Security Taxes Deduction
• NOL Carryover
• Military Reservist Travel Expenses
• Child’s Private School Expenses
• Student-Loan Interest
• Home Energy Improvement Credit
• Home Solar Credit
• Clean Vehicle Credit
• Gambling Losses
• Live in a State Without a State Income Tax?
• Spousal IRA
• Reinvested Dividends
• Worthless Stock
• Lifetime Learning Credit
• Charity Volunteer Tax Breaks
• Self-Employed Travel Expenses
• Self-Employed Health Insurance Deduction
• Summer Camp
• Medical Dependent
• Income in Respect of a Decedent (IRD)

As tax time approaches, here are some tax issues that taxpayers frequently overlook, ranging from obscure deductions to overlooked tax credits and benefits. Of course, not everything can be included since the tax law has grown significantly in complexity, and it would take a thick book to list everything. But besides what you are probably accustomed to, here are over 20 issues you may not be aware of and that can save you tax dollars.   

Low Income Year – If you are having a low-income year, there are tax strategies you can take advantage of, including the following:

• Capital Gains Rates – Capital gain tax rates are zero for taxpayers with low income, so if you sell stock or other property at a profit in an otherwise low-income year you might be able to benefit from the zero tax rate.
• Roth Conversions – A low-income year may present an opportunity to convert some of your traditional IRA funds to a Roth IRA for a low amount of tax.

Limitation on Tax Itemized Deduction – The tax code limits the itemized deductions for state and local taxes to $10,000.  Several states have developed work-a-rounds to circumvent that limitation. If you reside in a state that has developed a work-a-round and the total you paid of your state income tax (or state sales tax) and property taxes, substantially exceeds the $10,000 limit, you may wish to consider participating in your state’s program. 

State Income Tax Refund – For those who took the standard deduction on their 2022 federal return, your state income tax refund received in 2023 is not taxable income. If you itemized your deductions, then the state tax was a federal tax deduction, and to the extent you received a tax benefit from the deduction, the state tax refund you received in 2023 is federally taxable. However, in many cases, the entire refund will be tax-free if you were subject to the alternative minimum tax (AMT) for 2022, the deductible amount was reduced by the $10,000 limit on tax deductions, or part of the deduction pushed your deductions over the standard deduction threshold. Although the Form 1099-G shows the entire amount of the refund, not all of it may be taxable, so you do not want to report more than necessary. 

If you owed state income tax on your 2022 return and paid that tax during 2023, then that tax payment can be added to your state tax deduction for 2023, subject to the $10,000 limit for state and local taxes.  

Social Security Taxes Deduction – If you are self-employed, you can deduct half of the self-employment tax (Social Security and Medicare tax) that you are liable for on your 2023 net profits. You don’t have to itemize on a Schedule A to take the deduction because it is an adjustment to income. 

NOL Carryforward – There is no longer an NOL (net operating loss) carryback (except for farmers), so don’t overlook a carryforward from a prior year which can be used indefinitely until used up. However, for post-2020 tax years to which an NOL is carried, the amount of taxable income for that year that can be offset by NOLs arising in years after 2017 is limited to the lesser of:

• The aggregate of the NOL carryovers to that year, plus the NOL carrybacks to that year, or
• 80% of the taxable income computed without regard to the NOL deduction for the year.

The 80% limitation does not apply to losses that arose in years before 2018.

Military Reservist Travel Expenses – Armed forces reservists who travel more than 100 miles away from home and stay overnight in connection with service as a member of a reserve component can deduct their travel expenses as an adjustment to gross income (they don’t have to itemize deductions). Unreimbursed expenses for the reservist’s transportation, meals (subject to the 50% limit), and lodging qualify for the above-the-line deduction, but the deduction is limited to the amount that the federal government pays its employees for travel expenses – i.e., the general federal government per diem rate for lodging, meals, and incidental expenses applicable to the locale as well as the standard mileage rate (65.5 cents per mile for 2023) for car expenses plus parking, ferry fees, and tolls.

Child’s Private School Expenses – If your child is attending a private school, up to $10,000 per year of Sec. 529 college savings plan funds can be used to pay tuition for kindergarten through grade 12. However, tapping your college savings plan for these expenses may be detrimental to your overall long-term savings plan to pay for college tuition. 

Student-Loan Interest – If parents pay back a non-dependent child’s student loans, the IRS treats the transactions as if the money were a gift to the child and the child made the payment. Thus, the child is deemed as having paid any interest included in the payment and can deduct it as student-loan interest, which is deductible without having to itemize deductions, up to the annual limit of $2,500. However, the deduction may be phased out depending on the amount of the taxpayer’s modified adjusted gross income.

Home Energy Improvement Credit – This tax benefit goes all the way back to 2006, providing a tax credit for making energy-saving improvements to a taxpayer’s home. This tax credit was supposed to expire after 2021, but has been extended and enhanced by 2022 legislation. 

Prior to 2023, the credit had a lifetime cap of $500, which many taxpayers had taken advantage of at some time in the previous 16 years, while others could not remember if they had used the entire lifetime credit during those years. As a result, with a lifetime tax benefit of only $500, and a small credit rate of only 10%, the credit had become less of a motivator for taxpayers to make energy saving improvements to their homes and was frequently disregarded.  

The enhancements to this credit create a meaningful incentive for taxpayers to make energy-saving improvements to their homes. The credit now has an annual limit of $1,200 and an increased credit rate of 30%.   

Home Solar Credit – The Inflation Reduction Act gave new life to the federal tax credit for the purchase and installation costs of residential solar-power systems and battery systems. The credit will now not begin to phase out until 2033 and will continue to be 30% until then. 

The Inflation Reduction Act of 2022 amended the tax code by adding and defining the term “qualified battery storage technology expenditure.” This change clarifies that for expenditures made after December 31, 2022, battery storage technology which is installed in connection with a dwelling unit in the United States that is used as a residence by the taxpayer, and has a capacity of not less than 3 kilowatt hours, will now qualify for the credit.  

Home residents who already have a solar installation can add a storage battery and/or expand their existing capacity and qualify for the additional solar credit.   

Clean Vehicle Credit – The qualifications for the electric vehicle credit have gotten more restrictive, but now do include both new and used vehicles. 

• New Clean Vehicles – To determine which new vehicles qualify and the amount of the credit, consult with the U.S. Department of Energy website. To be eligible for the credit a vehicle’s manufacturer’s suggested retail price (MSRP) must be less than $80,000 for vans, pickups. and SUVs, and $55,000 for others. Another qualification requirement is that the buyer’s modified adjusted gross income cannot exceed $300,000 for married taxpayers filing jointly and surviving spouses. For those filing with the head of household status the limit is $225,000, and for all others it is $150,000.
• Pre-Owned Clean Vehicles – To determine which pre-owned vehicles qualify consult with the IRS index of qualified manufacturers and previously owned clean vehicles.  The credit is the lesser of $4,000 or 30% of the vehicle’s sale price, and the vehicle must be purchased from a dealer for a price not exceeding $25,000. For this credit the buyer’s modified adjusted gross income cannot exceed $150,000 for married taxpayers filing jointly and surviving spouses. For those filing head of household, the limit is $112,500 and for all others it is $75,000.  
• Dealer Report – For both credits, the dealer selling the vehicle is required to provide the buyer with a report, a copy of which goes to the IRS, that includes the amount of the available credit, the vehicle identification number, and other details.

Gambling Losses – Gambling losses up to the extent of one’s gambling winnings are allowed as a deduction and can help to offset gambling winnings, provided the taxpayer itemizes deductions. Good documentation of the amounts of winnings and losses is essential.

Live in a State Without a State Income Tax? –Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming are the states that do not have an income tax. Because for federal purposes you can choose to deduct either state income tax or sales tax when you itemize your deductions, if you live in one of these no-income-tax states your only choice will be sales tax.   

The sales tax that can be deducted is the actual amount paid during the year, which can be determined by the larger of the following:

1. Actual receipts for purchases OR
2. The amount from the IRS’s income-based table PLUS sales tax paid when purchasing motor vehicles, boats, and other items specified by the IRS.

Spousal IRA – If one spouse works and the other does not, the tax law allows the non-working spouse to base his or her contribution to an IRA on the working spouse’s income. This tax benefit is frequently overlooked when spouses have been working for years and basing their individual contributions on their own income, and then one of the spouses retires or otherwise stops working. Even if the working spouse has a pension plan at work and his or her income precludes making a deductible IRA contribution, the non-working or retired spouse may still make a contribution based on the working spouse’s income. Spousal contributions can also be made to Roth IRAs if the spouses’ joint income does not exceed IRS limits. There is no longer an age limitation for making contributions to IRAs.

Reinvested Dividends – If you are invested in a mutual fund, you are probably reinvesting the annual dividends. Reinvested dividends add to the basis of your investment, and when you sell the mutual fund, having a higher basis will reduce the gain. Mutual funds are required to track your basis for mutual fund shares purchased after 2012. Some even track the basis and reinvested dividends going further back. However, some do not, and it would be your responsibility to track the reinvested dividends so that you get the benefit of all reinvested dividends when you sell.    

Worthless Stock – If you are like most investors, you occasionally will pick a loser that declines in value. Sometimes, a security can even become totally worthless when the issuing company goes out of business. Whatever you do, don’t wait until it’s too late to claim your loss. If the IRS challenges the loss and the security is found to have become worthless in an earlier year, then the current year’s loss will be denied. 

Lifetime Learning Credit – The American Opportunity Credit (AOTC) is the education credit most familiar to taxpayers because it is available for the first four years of post-secondary education and provides a higher credit. It also requires the student to attend the college or university on at least a half-time basis and to pursue a program leading to a degree or other recognized educational credential. On the other hand, the Lifetime Learning Credit (LLC) is available for all years of post-secondary education and for courses to acquire or improve job skills. The student doesn’t need to be pursuing a program leading to a degree or other recognized education credential, and it is available for one or more courses. Many individuals who do not qualify for the AOTC overlook the LLC.   

Charity Volunteer Tax Breaks – If you volunteer your time for a charity or governmental entity, then you probably qualify for some tax breaks. Although no tax deduction is allowed for the value of services performed for a qualified charity or a federal, state, or local governmental agency, some deductions are permitted for out-of-pocket costs incurred while performing the services, such as away-from-home travel, lodging, and meals; automobile travel; and uniforms. 

Self-Employed Travel Expenses – If you are self-employed and travel for business, don’t overlook highway tolls, porter fees, airline baggage fees, tips, taxi fares, Uber/Lyft fees, car rentals, laundry, cleaning, or other incidentals while away, in addition to the normal meal, lodging, and transportation expenses.  

Self-Employed Health Insurance Deduction – A self-employed individual (or a partner or a more-than-2%-shareholder of an S corporation) can generally deduct, as an above-the-line expense, 100% of the amount paid during the tax year for medical insurance on behalf of themself, their spouse, and their dependents, limited to the self-employed taxpayer’s net income from self-employment. 

However, no deduction is allowed for any month when the self-employed individual is eligible to participate in a subsidized health plan maintained by their employer, or the employer of their spouse, any dependent, or their child who hasn’t attained age 27 as of the end of the tax year. The term “subsidized” means that the employer pays at least 50% of the coverage’s cost.

The health insurance premiums claimed as an above-the-line self-employed health insurance expense cannot also be claimed as a Schedule A medical expense.

Summer Camp – If you are single and working, or married and both you and your spouse work, you may not realize that the costs of day camp during the summer generally count as expenses toward the child and dependent care credit allowing you to work. A day camp or similar program may qualify even if the camp specializes in a particular activity, such as soccer or computers. The credit ranges from 20% to 35% of the day camp’s cost with an expense limit of $3,000 for one child or $6,000 for two or more. Overnight camps do not count.   

Medical Dependent – When you itemize your deductions you can include your medical expenses and those of your spouse (if jointly filing) and dependents, provided the total medical costs exceed 7.5% of your adjusted gross income. You may not realize that you can include in the medical expenses deduction what you paid for certain individuals who are not your dependents. One such situation involves divorced parents, in which the non-custodial parent can deduct medical expenses they pay for their child, even when the other parent claims the child as a dependent. Another situation, which we refer to as a medical dependent, involves paying the expenses for someone who would qualify as your dependent except that their gross income is too much, which under normal circumstances would disqualify them. For 2023, the gross income limitation is $4,700.

Example – The taxpayers’ adult son was seriously injured in a motorcycle accident and did not have medical insurance. His parents paid all his medical expenses for the year. Their son meets all of the dependent qualifications, except that his gross income of $20,000 exceeds the gross income limit, which disqualifies him. However, under the exception, the parents can still include his medical expenses on their 1040 Schedule A. 

Income in Respect of a Decedent (IRD) – One of the most overlooked tax deductions is what is referred to as the IRD deduction. IRD is the acronym for income in respect of a decedent. IRD income is income that is taxable to the decedent’s estate and also taxable to the estate’s beneficiaries. Thus, it is double taxed; as a result, the beneficiaries generally receive a deduction equal to the difference between the decedent’s estate tax figured with and without the taxed income. Beneficiaries will only have this deduction if the decedent’s estate was large enough to be subject to the estate tax.  

If you have questions about how these or other tax issues apply to your particular tax circumstances, please give this office a call. 

 

Navigating U.S. Taxation: A Guide for Non-Resident Aliens

Article Highlights:

• Taxation of Non-resident Aliens
• FDAP Income
• Effectively Connected Income
• Form 1040NR – Non-resident Tax Return
• Form 8233 – Tax Treaty Exemption from Social Security and Medicare
• Form I-9 – Employment Eligibility Verification
• Form W-4 – Employees Withholding Certificate
• Form W-7 – Application for IRS Individual Taxpayer Identification Number

As a non-resident alien living and working in the United States, understanding the U.S. tax system can be a daunting task. This guide aims to simplify the process, providing you with a comprehensive overview of your tax obligations, potential tax treaty benefits, and the necessary forms you may need to file.  

A non-resident alien is defined for tax purposes as an individual who is not a U.S. citizen and who doesn’t have a “green card” or meet the substantial presence (in the U.S.) test. Additionally, an alien individual who qualifies as a resident of a treaty country (see details in IRS Publication 519) or a bona fide resident of Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, or American Samoa is a non-resident alien individual.

Non-resident aliens are taxed on their U.S. source income, which includes both earned income (wages, salaries, etc.) and investment income (interest, dividends, etc.). The tax rates applicable to non-resident aliens are generally the same as those for U.S. citizens and residents. However, the standard deduction is not available to non-resident aliens, except for students and business apprentices from India who meet certain conditions.

• FDAP income – FDAP income stands for Fixed, Determinable, Annual, or Periodic income. It refers to U.S. source non-business income paid to a foreign person or corporation that is not effectively connected income (ECI). This can include salaries, wages, premiums, and compensation for services performed in the U.S., as well as other fixed or determinable annual or periodic gains, profits, and income. FDAP income is subject to a 30% (or lower treaty) tax rate.

It’s important to note that a non-resident alien receiving only FDAP income upon which the 30% (or lower treaty) rate has been withheld is not required to file a U.S. income tax return. However, FDAP income can become effectively connected income (ECI) if the income is derived from assets used in or held for the use in the conduct of a trade or business in the U.S., or if the activities of that trade or business in the U.S. are a material factor in the realization of that income.

• Effectively Connected Income – ECI refers to income earned by a foreign individual or corporation from conducting a trade or business within the United States. This income is subject to U.S. income tax and must be reported on a U.S. income tax return. ECI can include income from various sources, such as the sale of goods or services, rental income, or income from investments that are connected to the U.S. business. ECI is taxed at graduated rates and the foreign person would be required to file a U.S. income tax return. However, ECI is not subject to a withholding obligation.
• Form 1040NR – As a non-resident alien, you will typically file Form 1040NR to report your U.S. source income. If you are a partner in a U.S. partnership that was not engaged in a U.S. trade or business during the year, you may receive Schedule K-1 (Form 1065) that includes only income from U.S. sources not effectively connected with a U.S. trade or business.
• Form 8233 – The United States has tax treaties with several countries, which may allow non-resident aliens from these countries to be exempt from certain U.S. taxes. IRS Publication 515 includes Internet links to this information and a IRS website provides additional information.

If a non-resident alien claims a tax treaty exemption from Social Security and Medicare withholding taxes, they must complete a Form 8233 and provide it to their employer. The employer must review, accept, and sign the form, then forward a copy to the IRS within five days. The employer must then wait ten days to see if the IRS has any objections to the exemption from withholding. 

• Form I-9 – The purpose of the Form I-9, also known as the Employment Eligibility Verification, is to verify the identity and employment authorization of individuals hired for employment in the United States. This applies to both citizens and non-citizens. Employers are required to ensure proper completion of Form I-9 for everyone they hire. The form serves to document that the employer has verified that the employee is eligible to work in the U.S.
• Form W-4 – All compensation that is not exempt under the tax treaty will be subject to employment taxes in conjunction with the non-resident alien’s Form W-4. This form is subject to special adjustments that consider restrictions on a non-resident alien’s filing status, ability to claim the standard deduction, and restrictions on claiming certain credits and deductions.

Non-resident aliens should review IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens, before completing the Form W-4. It’s important to note that non-resident aliens cannot write “exempt” in the space below Step 4c of the Form W-4 (2023 version), must enter a Social Security number at Step 1b, and may only claim “single” or “married filing separate” for their filing status at Step 1c, regardless of their actual marital status.

• Form W-7 – A non-resident alien who doesn’t have a Social Security Number (SSN) but is required to file a tax return or a statement must apply for an Individual Taxpayer Identification Number (ITIN). The ITIN is a tax processing number issued by the Internal Revenue Service for individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security Number.

To apply for an ITIN, Form W-7, IRS Application for Individual Taxpayer Identification Number, must be completed and filed according to the IRS instructions. The form should be attached to the federal income tax return for which the ITIN is needed. Please note that an ITIN does not provide work authorization and cannot be used to prove work authorization on an I-9 form. It is used for federal tax reporting only.

Navigating the U.S. tax system as a non-resident alien can be complex. It’s important to understand your obligations and potential benefits to avoid penalties and maximize your income. Please contact this office for assistance. 

 

The Significance of Milestones and Responsibilities in Early-Stage Advisor Agreements

In the dynamic world of startups, navigating uncharted waters is part of the game. As entrepreneurs, we’re often so laser-focused on building the next big thing that we may overlook the importance of structuring advisory relationships with care. It’s not uncommon for startups to be overly generous with equity, only to realize down the line that the advisor’s contributions didn’t align with the initial expectations. This is where the inclusion of milestones and responsibilities in early-stage advisor agreements comes into play—a practice that can be a game-changer for both parties involved.

Setting the Foundation for Success

A well-crafted advisor agreement serves as the foundation of any successful collaboration. It’s not just a legal document – it’s a roadmap for success. By delineating clear responsibilities and establishing milestones, startups can ensure that advisors are aligned with the company’s vision and objectives right from the start.

Avoiding Equity Overcommitment

One of the most common pitfalls startups face is overcommitting equity in exchange for advisory services. While it’s crucial to value the expertise advisors bring to the table, it’s equally important to ensure that the equity distribution is commensurate with the advisor’s actual contributions. Including a detailed list of responsibilities in the agreement allows both parties to have a transparent understanding of what’s expected, thus mitigating the risk of equity dilution.

Clarity Breeds Trust

Trust is the cornerstone of any successful business relationship. When advisors and startups are on the same page regarding their respective roles and responsibilities, it creates a foundation of trust that can withstand challenges and uncertainties. This clarity fosters an environment of open communication, where concerns can be addressed proactively, ultimately leading to a more productive and harmonious partnership.

Maximizing Advisor Impact

For advisors, knowing exactly what is expected of them enables them to direct their efforts strategically. By having a well-defined list of responsibilities, advisors can focus on areas where their expertise will have the greatest impact. This targeted approach not only benefits the startup by leveraging the advisor’s strengths but also ensures that the advisor’s time and expertise are utilized effectively.

A Roadmap to Success

Startups are often faced with a multitude of decisions, and having an experienced advisor can be a game-changer. However, to harness the full potential of this collaboration, it’s imperative to have a roadmap in place. Milestones act as signposts, guiding the way forward. They provide tangible markers of progress, enabling both the startup and the advisor to track the trajectory of the company and make informed decisions.

Avoiding Advisor-Founder Misalignment

In the fast-paced startup ecosystem, misalignment between advisors and founders can be a significant roadblock. Without clearly defined responsibilities, misunderstandings can arise, potentially leading to friction and unmet expectations. A comprehensive advisor agreement acts as a safeguard against such misalignment, ensuring that everyone is on the same page from day one.

The inclusion of milestones and responsibilities in early-stage advisor agreements is not just a legal formality—it’s a strategic imperative. It sets the stage for a successful collaboration by providing clarity, avoiding equity overcommitment, and maximizing the impact of advisors. By investing time and thought into crafting a robust advisor agreement, startups can pave the way for a fruitful and mutually beneficial relationship with their advisors. Remember, in the world of startups, every decision counts, and a well-structured advisor agreement is a decision that can make all the difference.

 

Innocent Spouse Tax Relief 

Article Highlights:

• Overview
• Innocent spouse relief 
• Separation of liability 
• Equitable relief 
• Fairness Facts and Circumstances
• Confidentiality 

If you are or were married and filed your federal tax return jointly with your spouse, and you were unaware of potential errors or underreporting on that tax return for which the IRS is now billing you, you may be eligible for innocent spouse relief. 

When married taxpayers file jointly, they become “jointly and individually” responsible (often referred to as “jointly and severally liable”) for the tax and interest or penalty due on their returns.  This is true even if they later separate or divorce.

Joint filers remain “jointly and severally liable” even if a divorce decree states that a former spouse is responsible for any amounts due on previously filed joint returns. The IRS will use all means to collect the tax from either or both spouses.  One spouse may be held responsible for all the tax due, even if all the income was earned by the other spouse.  However, a spouse in certain cases may be relieved of responsibility for tax, interest, and penalties on a joint return under special relief rules. There are three types of relief available:

1. Innocent spouse relief 
2. Separation of liability 
3. Equitable relief 

Innocent Spouse Relief – To qualify for innocent spouse relief, a taxpayer must meet all 3 of the following conditions:

1. Must have filed a joint return with an understatement of tax (i.e., the difference between the amount of tax that should have been shown on a return vs. the tax shown) that was due to erroneous items of his/her spouse. Erroneous items can include unreported income that was received by the non-innocent spouse and not reported on the return, or incorrect deductions, credits, or basis claimed by the non-innocent spouse which are improper or for which there is no basis in fact or law.
2. Must establish that at the time of signing the joint return, he/she didn’t know and had no reason to know that there was an understatement, and
3. Accounting for all the facts and circumstances, it would be unfair (i.e., inequitable) to hold the taxpayer liable for the understatement of tax. Indicators of unfairness are determined based on the facts and circumstances of each individual case.  To decide unfairness, the IRS will check several factors, which include:

• Significant Benefit – Did the “innocent spouse” receive significant direct or indirect benefit from the understatement of tax? A significant benefit is one which is excessive in terms of normal support.  

Example: In March 2022, Jenna received $20,000 from Terence, her spouse of 10 years. The funds were traced to Terence’s lottery winnings in 2021.  No winnings were reported on the couple’s joint federal return in 2021. The couple’s normal monthly household operating budget was around $4,000.  More than likely, the IRS would rule that Jenna had received a significant benefit due to the $20,000 gift, even though it was received in a year other than the one in which the unreported income occurred.     

• Desertion of the innocent spouse by the non-innocent spouse.
• Divorce or separation of the spouses.

Relief By Separation of Liability – To file a claim for this type of relief, the understatement of a joint tax liability (including interest and penalty) must be allocated (separated) between spouses (or former spouses).  Since this form of relief is for unpaid liabilities resulting from understatements of tax, the relief doesn’t generate refunds.

To request relief by separation, a taxpayer must have filed a joint return and meet either of the following when the application is filed:

• Be divorced or legally separated from the spouse with whom the joint return was filed (widowed counts the same as divorced or legally separated), OR
• Not be a member of the same household as the spouse with whom the joint return was filed during the 12-month period ending on the date IRS Form 8857, Request for Innocent Spouse Relief, is filed with the IRS.  Note: The reason for living apart must be due to estrangement, not temporary absence.

Innocent spouse relief by separation of liability won’t be granted in these situations:

1. IRS proves that the spouses transferred assets to each other fraudulently.
2. IRS shows that the “innocent spouse” had actual knowledge of erroneous items at the time of signing the joint return.  NOTE: A victim of domestic abuse who had actual knowledge of errors may still qualify for relief if the abuse happened before signing the joint return and fear prevented the abused spouse from challenging the treatment of return items.
3. The “non-innocent” spouse transfers property to the “innocent” spouse to avoid taxes. A transfer to avoid tax is presumed if made within one year before the date on which the IRS sent its first letter of proposed deficiency.  However, this presumption doesn’t apply if the transfer is made under a divorce decree or separate maintenance agreement, nor does it apply where a taxpayer can establish that the main purpose of the transfer was not tax avoidance.

Equitable Relief – If a taxpayer doesn’t qualify for the preceding two forms of innocent spouse relief, the IRS will automatically consider whether equitable relief is suitable to the situation.  A taxpayer may qualify for equitable relief if ALL the following are met:

1. The taxpayer doesn’t qualify under one of the other forms of relief (e.g., separation of liability).
2. The spouses didn’t transfer assets to each other fraudulently or for the purpose of avoiding tax payment.
3. The taxpayers’ return wasn’t fraudulently filed.
4. The taxpayer did not pay the tax owed (although a refund may be available for certain installment payments made after Form 8857 is filed).
5. The taxpayer can establish that it would be unfair (inequitable) to hold him/her responsible for the tax liability.
6. The income tax from which the taxpayer seeks relief is attributable to the “non-innocent” spouse, unless one of the following exceptions applies:

a. The item is partly or totally attributable to the taxpayer under community property law.

b. An item titled in the taxpayer’s name is attributable to the taxpayer unless rebutted by facts and circumstances.

c. The taxpayer had no knowledge, or reason to know, that the “non-innocent” spouse misappropriated the funds that were intended to pay the tax.

d. The taxpayer establishes being an abuse victim before signing the return, and because of prior abuse, didn’t challenge the treatment of items on the return for fear of retaliation by the spouse.

The IRS considers all facts and circumstances to determine if it is unfair to hold the innocent spouse responsible for an underpayment or understatement of tax.  The following factors are examples of items weighed by the Service in equitable relief cases:

• Favorable Factors:

• • Separation or divorce of the involved spouses
  • Economic hardship
  • Abuse
  • Lack of knowledge by the innocent spouse
  • Non-innocent spouse’s obligation under a divorce decree to pay the tax
  • The tax owed is attributed to the non-innocent spouse.

• Unfavorable Factors:

• • No economic hardship if relief is not granted.
  • Innocent spouse had knowledge of the understated items.
  • Innocent spouse received significant benefit from the unpaid tax.
  • Lack of good faith effort to comply with the tax law by the innocent spouse.
  • Innocent spouse has an obligation to pay the tax under a divorce decree.
  • Tax for which relief request is made is attributable to the innocent spouse.

Be aware that the law requires the IRS to inform your spouse or former spouse of the request for relief from liability. The IRS is also required to allow your spouse or former spouse to provide information that may assist in determining the amount of relief from liability. The IRS will not provide information to your spouse or former spouse that could infringe on your privacy. The IRS will not provide your current name, address, information about your employer, phone number or any other information that does not relate to making a determination about your request for relief from liability.

If you believe you qualify for relief under innocent spouse, separation of liability or equitable relief, please contact this office for assistance in filing for relief. It generally takes some time for the IRS to act on a request for relief and they quite often request additional information before making their final determination. 

 

Understanding Shakira’s Ongoing Tax Evasion Case

The world-renowned Colombian singer and songwriter, Shakira, has once again found herself in the spotlight, but this time, it’s not for her chart-topping hits or Grammy Award-winning performances. 

The pop sensation, age 46, has been charged with a second round of tax fraud crimes in Spain, adding another layer to an already complex legal saga. Here, we take a look at the details of Shakira’s ongoing tax evasion case, exploring the accusations, implications, and the broader context of celebrities facing tax-related challenges.

Accusations of Tax Fraud

Shakira was first accused of tax fraud in May 2022, as confirmed by Spanish-language news outlet, Marca. Since then, numerous details about the allegations have arisen and the singer, always a media darling, has found herself making headlines for the wrong reasons.

The Alleged Offshore Company

According to a Rolling Stone report, Barcelona prosecutors have accused Shakira of using an offshore company based in an unspecified tax haven to evade paying approximately $7.1 million (6.7 million euros) in taxes for the year 2018. This accusation sheds light on a common tactic employed by some individuals and business entities to minimize their tax obligations. Offshore tax structures, while legal in some cases, can raise suspicions and scrutiny when their primary purpose is to evade paying taxes.

The Residency Conundrum

At the heart of the tax fraud charges against Shakira is the assertion that the songstress spent more than half of each year in Spain between 2012 and 2014, despite officially listing her residence as the Bahamas during this period. Under Spanish tax law, individuals residing in the country for more than six months are considered residents and are required to pay taxes on their worldwide income. 

Shakira’s case underscores the importance of accurately declaring one’s tax residency. It highlights that one’s physical presence in a country, even for part of the year, can have significant tax implications. In this particular case, Shakira and her legal team deny that she spent more than six months per year during the alleged tax evasion period at the Barcelona residence she shared with her now ex-partner, football star, Gerard Piqué.

Legal Ramifications

Shakira’s tax evasion cases could have serious consequences. However, both the superstar and her legal team continue to deny any wrongdoing on her part.

Multiple Trials and Potential Penalties

Shakira is no stranger to legal proceedings related to tax matters. In addition to the ongoing case for 2018, she is set to stand trial for a separate tax evasion case involving a staggering $13.9 million (approximately 14.5 million euros) in unpaid income taxes spanning from 2012 to 2014. If convicted in the first trial, she could face up to eight years in prison. The tax evasion cases, both past and present, highlight the seriousness of tax-related offenses and the potential consequences.

After the initial charges last year, Shakira turned down a plea deal offered by the prosecution. At the time, she and her team issued a statement that read, in part, “The singer is fully confident of her innocence and therefore does not accept a settlement.”

Repayment and Legal Strategy

As noted, despite the accusations, Shakira has vehemently denied any wrongdoing. In an October 2022 interview with Elle magazine, she referred to the allegations as “false accusations” and asserted that she had paid all the taxes owed even before the lawsuit was filed. Shakira’s legal team is resolutely preparing for her upcoming trial, indicating her confidence in her legal position. 

This case emphasizes the importance of a well-prepared defense when facing allegations of tax fraud. It also highlights that individuals accused of tax evasion may have options to resolve the matter outside of jail time, although this does not absolve them of all potential penalties or legal consequences.

It is worth noting that prosecutors in Shakira’s situation have indicated that they will pursue jailtime for the singer after she turned down their settlement offer.

Celebrity Tax Woes

Shakira’s case is not an isolated incident within the realm of celebrity tax troubles. Over the past decade, Spanish tax authorities have intensified their efforts to tackle tax evasion, targeting high-profile figures, including soccer stars like Lionel Messi and Cristiano Ronaldo. 

While these celebrities have faced legal consequences, they have managed to avoid prison time due to national provisions allowing judges to waive sentences for first-time offenders. Shakira’s case serves as a reminder that tax authorities are increasingly vigilant in pursuing tax evasion cases involving high-earning individuals and celebrities.

As Shakira’s legal battles continue, her case serves as a stark reminder that tax matters are not confined to the worlds of finance and accounting but can span all industries. The allegations against the “Hips Don’t Lie” artist shed light on the importance of accurately declaring tax residency and the consequences of employing offshore companies for tax avoidance. 

Shakira’s case underscores the need for individuals, regardless of their fame or wealth, to prioritize compliance with tax laws and to ensure transparency in their financial dealings. It serves as a cautionary tale for regular taxpayers and celebrities alike, emphasizing the need for transparency and compliance with tax laws around the world.

 

Streamline Your Business Finances: QuickBooks Online Fund Recording Tips

As the business world becomes increasingly competitive – and increasingly digital – it is essential to maintain meticulous financial tracking and accurate recording of all incoming funds. QuickBooks Online (QBO) is an excellent resource for small business owners who are looking to do their recordkeeping in the cloud. Whether you’re receiving payments for invoices, documenting instant sales, or conducting business on the go, the platform equips you with the tools you need to ensure that all of your income is correctly recorded.

Delayed Payments

If your business involves sending invoices for products or services, QBO offers multiple ways to record payments when they come in. You can opt to open the invoice directly and click on the “Receive payment” option in the upper right corner. However, accessing the “All Sales” screen provides an opportunity to review the status of other pending transactions. To navigate to this screen, click on “Sales” in the toolbar, then select “All Sales.”

For those with extensive lists of sales transactions, using the Filter tool can streamline the process. Click on the down arrow next to “Filter” in the upper left to explore your search options (e.g., Status, Customer).

Once you’ve located the correct invoice, navigate to the bottom of that row. In the “Action” column, you’ll find the “Receive payment” option. Feel free to explore other available choices by clicking on the down arrow. When the “Receive Payment” window appears, specify the applicable payment method, leave the “Deposit to” field set to “Undeposited Funds,” and double-check that all information is accurate. You can print the receipt or add attachments using the provided links, then save it.

Pro Tip: Offering customers the option to make online payments tends to expedite the invoice settlement process.

Instant Payments

In situations where your business receives payments at the time of product or service delivery, issuing a sales receipt – rather than an invoice – is the way to go. this is also essential for your records. Simply click on the “+New” button in the upper left and select “Sales receipt” under Customers to open a blank form. You’ll fill it out in a manner similar to creating an invoice. Start by selecting the customer and proceed to input or select any necessary data for the remaining fields.

If you find yourself not needing all the fields on your sales forms, don’t hesitate to remove some or add custom ones. The beauty of QBO is that you can make it work for your company.

Going Mobile

For those who conduct business on the go, the QuickBooks mobile app makes it simple for users to create sales receipts for your customers. By clicking on the plus (+) sign at the bottom of the screen and selecting “Sales Receipt,” you can access a form similar to what you’d use on your desktop computer. The layout may differ, but the form’s functionality remains intact.

Having a QuickBooks Payments account is especially helpful when you’re making mobile sales. You can even accept credit and debit card payments by ordering a card reader directly from Intuit.

Accurate payment recording is always essential. Nowadays, with the IRS cracking down and business regulations changing all the time, it’s more critical than ever to ensure that every dollar is accounted for. QuickBooks online allows you to become a more confident business owner.

 

November 2023 Individual Due Dates

November 13 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during October, you are required to report them to your employer on IRS Form 4070 no later than November 13. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

Weekends & Holidays:

If a due date falls on a Saturday, Sunday or legal holiday, the due date is automatically extended until the next business day that is not itself a legal holiday. 

Disaster Area Extensions:

Please note that when a geographical area is designated as a disaster area, due dates will be extended. For more information whether an area has been designated a disaster area and the filing extension dates visit the following websites:

FEMA: https://www.fema.gov/disaster/declarations
IRS: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

 

November 2023 Business Due Dates

November 13 – Social Security, Medicare and Withheld Income Tax

File Form 941 for the third quarter of 2023. This due date applies only if you deposited the tax for the quarter in full and on time.

November 15 – Social Security, Medicare and Withheld Income Tax

If the monthly deposit rule applies, deposit the tax for payments in October.

November 15 – Nonpayroll Withholding

If the monthly deposit rule applies, deposit the tax for payments in October.

Weekends & Holidays:

If a due date falls on a Saturday, Sunday or legal holiday, the due date is automatically extended until the next business day that is not itself a legal holiday. 

Disaster Area Extensions:

Please note that when a geographical area is designated as a disaster area, due dates will be extended. For more information whether an area has been designated a disaster area and the filing extension dates visit the following websites:

FEMA: https://www.fema.gov/disaster/declarations
IRS:https://www.irs.gov/newsroom/tax-relief-in-disaster-situations