Wisconsin Counties Declared Disaster Areas

President Bush has declared a number of Wisconsin counties disaster areas due to the recent flooding. While this declaration is helpful in securing funding for clean up activities, the IRS and Wisconsin Department of Revenue also provide relief in the form of claiming tax deductible casualty losses, and by postponing the due dates for many forms and payments. View the IRS special release on the disaster relief.

Counties affected by the declaration

As of Wednesday, July 9, the following 30 counties in Wisconsin have been declared disaster areas:

Deduction for Casualty Losses can be accelerated

The tax code provides a deduction for casualty losses (fire, theft, storms, etc) for any loss not otherwise reimbursed by insurance. The amount of the loss is reduced by $100 and 10% of adjusted gross income. While the loss in normally claimed in the year incurred, a presidentially declared disaster allows for the loss to be claimed in the prior year (via an amended return, if necessary), or the current year. The benefits of claiming on the prior year return is to accelerate the refund for the additional deduction. However, be careful to review both the 2007 and 2008 return, as claiming in 2008 may be more beneficial if you are in a higher tax bracket in 2008.

Postponed due dates for various forms/payments

IRS has given "affected taxpayers" until August 13, 2008 to file most tax returns, or to make tax payments (including estimated tax payments) with respect to returns/payments with an original or extended due date occurring on or after June 5, 2008, and on of before August 13, 2008.

There are numerous other time-sensitive actions for which this postponed due date applies: view a complete list.

The postponement does not apply to employment and excise tax deposits. IRS will, however, abate penalties for failure to make timely employment and excise tax deposits, due on or after June 5, 2008, and on or before June 20, 2008, provided these deposits were made by June 20, 2008.

"Affected taxpayers" include:

1. An individual whose principal residence is located in a covered disaster area;
2. A business entity or sole proprietor whose principal place of business is located in a covered disaster area;
3. An individual who is a relief worker affiliated with a recognized government or philanthropic organization and who is assisting in the covered disaster area;
4. An individaul or business entity not described in 1 or 2 above, or any estate or trust, whose records necessary to meet a deadline are maintained in a covered disaster area;
5. Any other person determined by IRS to be an "affected taxpayer"

Wisconsin Department of Revenue relief

Wisconsin has postponed its due dates as well, following the federal dates above, for individual and corporation income tax returns and payments.

For Sales and Use, Withholding, and Excise Tax returns, reports, and payments with due dates between June 5, 2008 and August 13, 2008, an extension of time to file for 30 days is available only upon request. Learn how to request this extension.

Please contact your Schenck tax advisor to discuss this information in greater detail.