Prepare Taxes for Hurricane Season

With the 2011 officially in full swing as of June 1, many individuals will have taken precautions in case disaster strikes. Such measures typically include purchasing homeowner’s insurance, stocking up on emergency supplies, and safeguarding valuables. However, many homeowners forget to also safeguard their tax information.

Documentation can be crucial when attempting to recover in the wake of a natural disaster. By ensuring that records survive, taxpayers may avoid disputes with the IRS in the form of conflict over unpaid taxes, penalties or inappropriately assigned taxes. Records can also be crucial when seeking insurance or compensation for lost belongings.

By taking a few simple steps to protect vital documents before a hurricane hits, disaster for both homeowners and business owners can be avoided.

1. Create an electronic backup set of records.

The IRS strongly recommends that taxpayers create an electronic copy of all records. The backup should then be kept in a safe, secure location away from the original set. The backup should include vital documents such as bank statements, tax returns, and insurance policies.

By ensuring that such documentation will survive any natural disaster, taxpayers can be more certain of receiving assistance after the fact, as well as a smoother transition to post-disaster recovery.

2. Document any valuables.

Taxpayers should create documentation of any valuables you might own. Ideally, take photographs or recordings of the contents of the home or business in question, especially items of higher value. Such a record can help an individual prove that certain items were loss as well as the market value of items for insurance and casualty loss claims. Photos should be stored outside the home in a safe, secure location.

3. Update emergency plans.

Emergency plans should be reviewed and updated annually to accommodate changing personal and business situations, as well as preparedness needs. In particular, businesses should be certain that emergency plans are revised to include any new employees or changing functions. In a business situation, employers should always ensure that their employees are aware of any changes to the emergency plans.