Recently, the California Franchise Tax Board (FTB) announced special tax filing relief for Californians affected by wildfires (beginning August 14, 2020). Specifically, taxpayers in governor-declared or presidentially declared disaster areas received a filing extension for tax year 2019 California tax returns until December 15, 2020.
Which Californian taxpayers are eligible for relief?
On August 24, the Internal Revenue Service (IRS) granted relief to individuals and businesses in eight California counties: Lake, Monterey, Napa, San Mateo, Santa Cruz, Solano, Sonoma, and Yolo. Any additional counties added to the disaster area will receive the same December 15 filing extension. Relief applies to various upcoming tax filing deadlines including:
- Individual filers whose previous tax-filing extension was set to end October 15. Note: This relief does not pertain to corresponding tax payments originally due on July 15, 2020.
- Calendar-year tax-exempt organizations whose previous 2019 extensions were set to end on November 15.
Can taxpayers claim a deduction for any wildfire-related losses?
Wildfire victims may claim a deduction for a disaster loss sustained in an area proclaimed by the governor to be in a state of emergency. For a complete list of all disasters declared by the governor, see the “List of Disasters” on the FTB’s disaster loss page. Additional information is available in Publication 1034, 2019 Disaster Loss: How to Claim a State Tax Deduction.
Taxpayers may claim their disaster loss in one of two ways:
- They may claim disaster loss for the 2020 tax year when they file their return next spring; or
- They may claim the loss against 2019 income on this year’s return.
Taxpayers who have already filed for this year may file an amended return. The advantage of claiming the disaster loss in the prior tax year is that the FTB can issue a refund sooner.
How can Californians claim the loss?
To claim the disaster loss, taxpayers should write the name of the disaster in blue or black ink at the top of their tax returns to alert FTB and to expedite any refund. If taxpayers are filing electronically, they should follow software instructions to enter disaster information.
How can Squar Milner help?
Our team of tax professionals is ready to help you during these troubling times. As we all look to overcome the challenges presented to our communities during fire season, we can assist you, your family and/or your business with making the most optimal decisions. If you have been adversely affected by California wildfires this summer, please get in touch with your Squar Milner tax advisor to learn more about your tax options.
Disclaimer: This material has been prepared for informational purposes only, and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional tax planner or financial planner. All information is provided “as is,” with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.