News & Updates

Rebuilding after a natural disaster can be overwhelming. Important documents like financial information and tax records are often destroyed in a disaster, and reconstructing these records is important for applying to federal assistance and insurance reimbursement. IRS.gov has the information disaster victims need, including disaster-related filing extensions and information about tax relief.

These IRS.gov webpages have tax-related disaster relief information:

• Reconstructing Records After a Natural Disaster or Casualty Loss: This webpage helps who need to reconstruct their financial records after a disaster. This may be essential for properly documenting a tax-deductible loss, supporting various tax-related transactions or getting federal assistance or insurance reimbursement.

• Tax Relief in Disaster Situations: This page features links to resources that walk people through information that will help them after a disaster. It also links to local news releases and frequently asked questions.

• IRS News From Around the Nation: This page rounds up news about local areas, including disaster relief and tax provisions that affect certain states.

• Frequently Asked Questions for disaster victims: This resource links to pages with answers to questions that victims may have. Each page highlights a specific topic to help people after a disaster.

These IRS publications can also help taxpayers:

• Publication 3067, IRS Disaster Assistance - Federally Declared DisasterPDF provides information to individuals and businesses affected by a federally declared disaster. It also covers the assistance available to disaster victims.

• Publication 584, Casualty, Disaster and Theft Loss Workbook helps individual taxpayers figure their loss on personal-use property in the event of a disaster, casualty or theft.

• Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook helps businesses figure their loss on business and income-producing property in the event of a disaster, casualty or theft.

• Publication 547, Casualties, Disasters and Thefts explains the tax treatment of casualties, thefts and losses on deposits.

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Sometimes the line between having a hobby and running a business can be confusing, but knowing the difference is important because hobbies and businesses are treated differently when it's time to file a tax return. The biggest difference between the two is that businesses operate to make a profit while hobbies are for pleasure or recreation.

Whether someone is having fun with a hobby or running a business, if they accept more than $600 for goods and services using online marketplaces or payment apps, they could receive a Form 1099-K. Profits from the sale of goods, including personal items, and services is taxable income that must be reported on tax returns.

There are a few other things people should consider when deciding whether their project is a hobby or business. No single thing is the deciding factor. Taxpayers should review all of the factors to make a good decision.

How taxpayers can decide if it's a hobby or business

These questions can help taxpayers decide whether they have a hobby or business:

• Do they carry out the activity in a businesslike manner and keep complete and accurate books and records?
  
• Does the time and effort they put into the activity show they intend to make a profit?
  
• Does the activity make a profit in some years – if so, how much profit does it make?
  
• Can they expect to make a future profit from the appreciation of the assets used in the activity?
  
• Do they depend on income from the activity for their livelihood?
  
• Are any losses due to circumstances beyond their control or are the losses normal for the startup phase of their type of business?
  
• Do they change their methods of operation to improve profitability?
  
• Do the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business?

Whether taxpayers have a hobby or run a business, good record keeping is always key when it's time to file taxes.

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Taxpayers who missed the recent April filing and payment deadline should know their obligations and the possible consequences if they don't file or have an overdue tax bill.

Taxpayers who owe tax

Tax owed and not paid by April 18, 2023, is subject to penalties and interest. Anyone who didn't file and owes tax should file a return as soon as they can and pay as much as they can to reduce penalties and interest. Electronic filing options, including IRS Free File, are still available on IRS.gov through October 16, 2023, to prepare and file returns electronically.

Filing soon is very important because the late-filing and late-payment penalties and interest on unpaid taxes add up quickly. Some taxpayers filing after the deadline may qualify for penalty relief. For those charged a penalty, they may contact the IRS by calling the number on their notice and explain why they couldn't file and pay on time.

Taxpayers who have a history of filing and paying on time often qualify for administrative penalty relief. A taxpayer usually qualifies if they have filed and paid promptly for the past three years and meet other requirements. For details, taxpayers should visit the first-time penalty abatement page on IRS.gov.

If taxpayers find that they owe taxes, they can review their available payment options. The IRS has options for taxpayers who can't pay taxes they owe. Information on reducing the amount of interest owed is on the interest abatement page of IRS.gov.

Military personnel can still use MilTax

The military community can also file their taxes using MilTax, a free tax resource offered through the Department of Defense. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.

Some taxpayers have extra time

Some taxpayers may have extra time to file their tax returns and pay any taxes due. This includes some disaster victims, taxpayers living overseas, certain military service members and eligible support personnel in combat zones.

Taxpayers who weren't required to file

Some people may choose not to file a tax return because they didn't earn enough money to be required to file. Generally, they won't receive a penalty if they are owed a refund, but they risk missing out on their refund.

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After filing a return, taxpayers due a refund are usually eager for that money to hit their bank account. They can check the status of their refund easily and conveniently with the IRS Where's My Refund? tool at IRS.gov/refunds and with the IRS2Go app. Refund status is available within 24 hours of the IRS letting the taxpayer know that they got the e-filed return. The tool also gives the taxpayer a personalized refund date after the IRS processes the return and approves the refund.

To use the tool, taxpayers need their:

• Social Security number or Individual Taxpayer Identification number
• Filing status
• Exact amount of the refund claimed on their tax return

The tool shows three statuses:

• Return received
• Refund approved
• Refund sent

When the status changes to "refund approved," the IRS is preparing to send the refund, either as a direct deposit to the taxpayer's bank account or directly to the taxpayer by check in the mail to the address on their tax return.

Taxpayers don't need to check the status more than once a day. The IRS updates the Where's My Refund? overnight in most cases. Calling the IRS won't speed up a tax refund. The information available on Where's My Refund? is the same information available to IRS telephone assistors. Taxpayers should allow time for their bank or credit union to post the refund to their account or for it to arrive in the mail.

Refund timing

The IRS issues most refunds in fewer than 21 days. Some tax returns require more time to review, and this can delay a refund. It takes longer to process a return if the taxpayer:

• Filed their return on paper.
• Is expecting a refund from an amended return. Find processing times of amended returns with Where's My Amended Return?
• Filed an injured spouse claim.
• Attached an ITIN application to their refund claim. Taxpayers can review Topic No. 857, Individual Taxpayer Identification Number, for details.
• Filed a Form 1040-NR to request a refund of tax withheld on a Form 1042-S. In this case, it can take up to 6 months from the original due date of the 1040-NR return or the date they filed the 1040-NR, whichever is later, to get any refund due.

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After someone with a filing requirement passes away, their surviving spouse or representative should file the deceased person's final tax return. On the final tax return, the surviving spouse or representative should note that the person has died. The IRS doesn't need a copy of the death certificate or other proof of death.

Usually, the representative filing the final tax return is named in the person's will or appointed by a court. Sometimes when there isn't a surviving spouse or appointed representative, a personal representative will file the final return and attach Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer.

Things to know about filing the final tax return

Generally, the final individual income tax return of a deceased person is prepared and filed the same way as if the person were alive.

• The return must report all income up to the date of death and claim all eligible credits and deductions.
• If the deceased person did not file individual income tax returns for the years before their death, their surviving spouse or representative may have to file prior year returns.
• The IRS considers the surviving spouse married for the full year their spouse died if they don't remarry during that year.
• The surviving spouse is eligible to use filing status "married filing jointly" or "married filing separately."
• The same tax deadlines apply for final returns. If, for example, the deceased person died in 2022, their final return is due by April 18, 2023, unless the surviving spouse or representative has an extension to file.
• When e-filing, the surviving spouse or representative should follow the directions provided by the tax software for the correct signature and notation requirements.
• For paper returns, the filer should write "deceased," the person's name and the date of death across the top.

Who should sign the tax return

Here's who should sign the tax return:

• Any appointed representative must sign the return. If it's a joint return, the surviving spouse must also sign it.
• If there isn't an appointed representative, the surviving spouse filing a joint return should sign the return and write in the signature area, "filing as surviving spouse."
• If there's no appointed representative and no surviving spouse, the person in charge of the deceased person's property must file and sign the return as "personal representative."

Other documents to include with the final tax return

Court-appointed representatives should attach a copy of the court document showing their appointment. Representatives who aren't court-appointed must include Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer to claim any refund. Surviving spouses and court-appointed representatives don't need to complete this form.

If tax is due, the filer should submit payment with the return or visit the payments page of IRS.gov for other payment options. If they can't pay the amount due immediately, they may qualify for a payment plan or installment agreement.

Qualifying widow or widower

Surviving spouses with dependent children may be able to file as a Qualifying Surviving Spouse for two years after their spouse's death. This filing status allows them to use joint return tax rates and the highest standard deduction amount if they don't itemize deductions.

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