Tips for Individuals Who Need to Reconstruct Records After a Disaster

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Taxpayers who are victims of a disaster might need to reconstruct records to prove their loss. Doing this may be essential for tax purposes, getting federal assistance, or insurance reimbursement.

Here are 12 things taxpayers can do to help reconstruct their records after a disaster:

• Taxpayers can get free tax return transcripts by using the Get Transcript tool on IRS.gov, or use their smartphone with the IRS2Go mobile phone app. They can also call 800-908-9946 to order them by phone.
• To establish the extent of the damage, taxpayers should take photographs or videos as soon after the disaster as possible.
• Taxpayers can contact the title company, escrow company, or bank that handled the purchase of their home to get copies of appropriate documents.
• Home owners should review their insurance policy as the policy usually lists the value of a building to establish a base figure for replacement.
• Taxpayers who made improvements to their home should contact the contractors who did the work to see if records are available. If possible, the home owner should get statements from the contractors to verify the work and cost. They can also get written accounts from friends and relatives who saw the house before and after any improvements.
• For inherited property, taxpayers can check court records for probate values. If a trust or estate existed, the taxpayer can contact the attorney who handled the trust.
• When no other records are available, taxpayers can check the county assessor’s office for old records that might address the value of the property.
• There are several resources that can help someone determine the current fair-market value of most cars on the road. These resources are all available online and at most libraries:
• Kelley’s Blue Book
• National Automobile Dealers Association
• Edmunds
• Taxpayers can look on their mobile phone for pictures that show the damaged property before the disaster.
• Taxpayers can support the valuation of property with photographs, videos, canceled checks, receipts, or other evidence.
• If they bought items using a credit card or debit card, they should contact their credit card company or bank for past statements.
• If a taxpayer doesn’t have photographs or videos of their property, a simple method to help them remember what items they lost is to sketch pictures of each room that was impacted.

More Information:

• Publication 547, Casualties, Disasters, and Thefts
• Publication 584, Casualty, Disaster, and Theft Loss Workbook
• Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook
• Publication 2194, Disaster Resource Guide for Individuals and Businesses
• Federal Emergency Management Agency
• Small Business Administration
• Disasterassistance.gov

IRS Reminds Parents, Students to Explore Education Resources on IRS.gov

WASHINGTON – The Internal Revenue Service today reminded parents and students that there are many tax benefits available to them, and the easiest way to learn more about them is through the education resources available on IRS.gov.

Besides tax credits such as the American Opportunity Tax Credit and the Lifetime Learning Credit, there are other education-related tax benefits that can help reduce a taxpayer’s tax liability. Savings plans, such as 529 plans, also offer tax-free ways to save for a student’s qualified education expenses.

Deductions:

Student Loan Interest Deduction

If a taxpayer’s modified adjusted gross income (MAGI) in 2017 is less than $80,000 ($165,000 if filing a joint return), there is a special deduction allowed for paying interest on a qualified student loan used for higher education. This may include both required and voluntary interest payments. Eligible taxpayers can claim this deduction even if they don’t itemize their deductions on Form 1040 Schedule A.

• Qualified Student Loan is a loan:
• Taken out solely to pay qualified education expenses that were for the taxpayer, their spouse or a person who was their dependent when they took out the loan.
• Paid or incurred within a reasonable period of time before or after the taxpayer took out the loan.
• For education provided during an academic period for an eligible student.
• From someone other than a relative.
• That is not taken from a qualified employer plan.
• Qualified Education Expenses include amounts paid for the following items:
• Tuition and fees.
• Room and board.
• Books, supplies and equipment.
• Other necessary expenses, such as transportation.

Business Deduction for Work-Related Education

A taxpayer who is an employee and can itemize their deductions may be able to claim a deduction for expenses they paid for work-related education.

For self-employed workers, deduct expenses for qualifying work-related education directly from self-employment income. This reduces the amount of income subject to both income tax and self-employment tax.

To claim a business deduction for work-related education, the taxpayer must:

• Be working.
• Itemize their deductions on Schedule A (Form 1040 or 1040NR), if they are an employee.
• File Schedule C, Schedule C-EZ or Schedule F if the taxpayer is self-employed.
• Have expenses for education that meet the requirements for qualifying work-related education.

Savings Plans:

Qualified Tuition Programs (529 Plans)

States may establish and maintain programs that allow taxpayers to either prepay or contribute to an account for paying a student’s qualified education expenses at a postsecondary institution. No tax is due on a distribution from a qualified tuition program unless the amount distributed is greater than the beneficiary’s adjusted qualified education expenses.

Qualified expenses include:

• Required tuition and fees.
• Books, supplies and equipment.
• Computer or peripheral equipment, computer software and internet access and related services.
• Room and board for those who qualify as at least half-time students.  

Additional IRS Resources:

• 529 Plans: Questions and Answers
• Tax Benefit for Disability: Section 529A ABLE Accounts
• Education Credits
• Publication 970, Tax Benefits for Education
• Tax Information for Students

IRS Reminds Educators of Tax Benefits

WASHINGTON — As teachers, administrators and aides have launched into their fall semester, taxes may not be on the top of their list. However, knowing what to keep track of now can help reduce the burden at tax time. The Internal Revenue Service reminds educators that there are three key work-related tax benefits that may help them reduce what they pay in taxes.

Educators can take advantage of tax deductions for qualified expenses related to their profession. The costs many educators incur out-of-pocket include items such as classroom supplies, training and travel.

There are two methods educators can choose for deducting qualified expenses: Claiming the Educator Expense Deduction (up to $250) or, for those who itemize their deductions, claiming eligible work-related expenses as a miscellaneous deduction on Schedule A.

A third key benefit enables many teachers and other educators to take advantage of various education tax benefits for their ongoing educational pursuits, especially the Lifetime Learning Credit or, in some instances depending on their circumstances, the American Opportunity Tax Credit.

Educator Expense Deduction

Educators can deduct up to $250 ($500 if married filing jointly and both spouses are eligible educators, but not more than $250 each) of unreimbursed business expenses. The educator expense deduction, claimed on either Form 1040 Line 23 or Form 1040A Line 16, is available even if an educator doesn’t itemize their deductions. To do so, the taxpayer must be a kindergarten through grade 12 teacher, instructor, counselor, principal or aide for at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.

Those who qualify can deduct costs like books, supplies, computer equipment and software, classroom equipment and supplementary materials used in the classroom. Expenses for participation in professional development courses are also deductible. Athletic supplies qualify if used for courses in health or physical education.

Itemizing Deductions (Using Schedule A)

Often educators have qualifying classroom and professional development expenses that exceed the $250 limit. In that case, the IRS encourages them to claim these excess expenses as a miscellaneous deduction on Schedule A (Form 1040 or Form 1040NR). In addition, educators can claim other work-related expenses, such as the cost of subscriptions to professional journals, professional licenses and union dues. Transportation expenses may also be deductible in situations such as, for example, where an educator assigned to teach at two different schools needs to drive from one school to the other on the same day.

Miscellaneous deductions of this kind are subject to a  two-percent limit. This means that a taxpayer must subtract two percent of their adjusted gross income from the total qualifying miscellaneous deduction amount. For more information, see Publication 529, Miscellaneous Deductions, available on IRS.gov.

Keeping Records

Educators should keep detailed records of qualifying expenses noting the date, amount and purpose of each purchase. This will help prevent a missed deduction at tax time.

Taxpayers should also keep a copy of their tax return for at least three years. Copies of tax returns may be needed for many reasons. If applying for college financial aid, a tax transcript may be all that is needed. A tax transcript summarizes return information and includes adjusted gross income. Get one from the IRS for free.

The quickest way to get a copy of a tax transcript is to use the Get Transcript application. After verifying identity, taxpayers can view and print their transcript immediately online. The online application includes a robust identity verification process. Those who can’t pass the verification must request the transcript be mailed. This takes five to 10 days, so plan ahead and request the transcript early.

Additional IRS Resources:

• Educator Expense Deduction
• Work-Related Education Expenses
• Interactive education credit app
• Education Tax Credits

Taxpayers Should Be Wary of Unsolicited Calls from the IRS

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Taxpayers who get an unexpected or unsolicited phone call from the IRS should be wary – it’s probably a scam. Phone calls continue to be one of the most common ways that thieves try to get taxpayers to provide personal information. These scammers then use that information to gain access to the victim’s bank or other account. 

When a taxpayer answers the phone, it might be a recording or an actual person claiming to be from the IRS. Sometimes the scammer tells the taxpayer they owe money and must pay right away. They might also say the person has a refund waiting, and then they ask for bank account information over the phone.

Taxpayers should not take the bait and fall for this trick. Here are several tips that will help taxpayers avoid becoming a scam victim.

The real IRS will not:

• Call to demand immediate payment
• Call someone if they owe taxes without first sending a bill in the mail
• Demand tax payment and not allow the taxpayer to question or appeal the amount owed
• Require that someone pay their taxes a certain way, such as with a prepaid debit card
• Ask for credit or debit card numbers over the phone
• Threaten to bring in local police or other agencies to arrest a taxpayer who doesn’t pay
• Threaten a lawsuit

Taxpayers who don’t owe taxes or who have no reason to think they do should follow these steps:

• Use the Treasury Inspector General for Tax Administration’s IRS Impersonation Scam Reporting web page to report the incident.
• Report it to the Federal Trade Commission with the FTC Complaint Assistant on FTC.gov. 
• Taxpayers who think they might actually owe taxes should follow these steps:
• Ask for a call back number and an employee badge number.
• Call the IRS at 1-800-829-1040.

Every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are the Taxpayer Bill of Rights. Taxpayers can visit IRS.gov to explore their rights and the agency’s obligations to protect them.

IRS YouTube Videos:

• Tax Scams – English | Spanish | ASL