The IRS works alongside other federal agencies to ease the burden on individuals and businesses impacted by natural disasters by offering various forms of tax relief. Significant disasters include hurricanes, floods, wildfires, and earthquakes, and relief provisions that can help affected taxpayers manage filing deadlines, claim deductions, and recover losses. This article outlines what tax preparers need to know when assisting clients in disaster-affected areas, including how to verify qualified disasters, understand deduction rules, gather required documentation, and apply special provisions under current and upcoming tax laws.
Tax relief for victims of natural disasters
Good news – there are options for your clients that have been affected by a qualified natural disaster. When a disaster is officially declared by FEMA, the IRS announces available relief through official IRS press releases, which identify the affected areas and outline postponed deadlines and other relief provisions. Disaster relief may apply to both individual and business returns located in the disaster area, depending on IRS guidance. As long as the disaster is recognized by FEMA and the IRS, your client should receive some tax relief for their loss.
The One Big Beautiful Bill (OBBB) is expected to expand qualifying disasters to include state-declared disasters. For tax years after December 31, 2025, disaster tax law provisions will apply to both federal and state declared natural disasters.
If your client qualifies, the IRS may grant them additional time to file, pay certain taxes, and perform time-sensitive tasks like making retirement contributions. In addition, the IRS may waive fees for requesting copies of prior-year tax returns, which are often needed for insurance claims or disaster recovery.
How do I know if my client was affected by a qualified disaster?
To determine if an affected taxpayer qualified for IRS disaster relief, start by verifying that the event is a FEMA-recognized disaster and that the declaration includes Individual Assistance (IA). In practice, the IRS typically issues relief after FEMA issues a declaration with IA and then the IRS confirms specific counties and deadlines through an official press release.
To confirm the declaration and Individual Assistance (IA) status, go to FEMA’s Disasters & Emergency Declarations page. Search by state and year to find the event. Confirm the declaration type and look for codes DR (Major Disaster Declaration) or EM (Emergency Declaration). Make sure the IA is listed because the IRS relief usually depends on IA being authorized.
If your client was affected by an event coded EM or DR, they might be eligible for relief under these conditions:
- Your client or their spouse lives in the disaster area
- The principal location of your client’s business is in the disaster area
- Your client’s tax records are located in the disaster area
Important: Certain federal agencies require applicants to submit tax information as part of their application process. To qualify for financial assistance, your clients must have filed all required tax return(s).
To request a copy or transcript of your client’s tax returns, use Form 4506, Request for Copy or Transcript of Tax Form.
What is a qualified disaster loss?
A qualified disaster loss is an uninsured or unreimbursed loss of your client’s personal property that can be attributed to a federally declared disaster. This means the property damage must not be covered by insurance or reimbursed by any other source. Some of these recent events include:
- Hurricane Helene
- Hurricane Milton
- Alaska flooding
- New Mexico wildfires
What disaster-related deductions can my client claim?
Clients may be able to claim a personal casualty loss deduction if the loss is tied to a federally declared disaster. This deduction can be claimed on Schedule A as an itemized deduction, or in some cases, added to the standard deduction amount. This means your clients do not have to itemize to receive this benefit.
Casualty loss deduction rules can vary by tax year due to changes under the Tax Cuts and Jobs Act (TCJA) and upcoming provisions in the One Big Beautiful Bill (OBBB). Generally, personal casualty and theft losses are deductible only if they are attributable to a federally declared disaster, and some losses may be subject to additional IRS thresholds or limitations.
What does my client need to provide to deduct a loss for taxes?
To claim a casualty loss on your client’s tax return, use Form 4684 Casualties and Thefts. This information will also help your client for insurance purposes. To support the loss claim, you will need to provide the following information:
- The type of casualty and when it occurred
- Confirmation that the loss was a direct result of a federally declared disaster
- Proof that your client owns the property
- Photos, videos, receipts, diagrams, floor plans, county assessor records
Keep in mind, some disaster-related losses may be subject to additional IRS thresholds or limitations, such as percentage-of-income reductions or adjusted basis rules. As a tax preparer, you may need the property’s fair market value before and after the disaster or its adjusted basis to accurately complete Form 4684.For the most up-to-date information regarding all forms of assistance, please visit the FEMA website and the IRS disaster relief press release.
