California & IRS Extend Tax Deadlines in Storm-Affected Counties

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Updated March 2023: The extended due date is now October 15th instead of May 15th, as indicated below, and includes all California counties except Modoc, Lassen, and Shasta.

California residents and business taxpayers may take advantage of an extension on the state and federal tax filing deadlines this year if they are located in the areas included in the federal disaster declaration following January’s heavy rainstorms. Moreover, taxpayers who suffered storm-related damage may claim a tax deduction on both their federal and state tax returns for any costs not covered by insurance or other reimbursements.

California storm victims now have until May 15, 2023, to file federal individual and business tax returns and to make tax payments, and the state of California has also announced the same extension of state tax filings and payments until May 15.

Taxpayers who qualify for the extension include:

• Individuals whose tax returns and payments are due on April 18, 2023.
• Quarterly estimated tax payments are due January 17, 2023, and April 18, 2023.
• Business entities whose tax returns and payments are due on March 15, 2023

The federal disaster declaration, made in January, covers 41 counties and spans the period from December 27, 2022, to January 31, 2023. The affected counties are:

Alameda, Colusa, Contra Costa, El Dorado, Fresno, Glenn, Humboldt, Kings, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Benito, San Bernardino, San Diego, San Francisco, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Tulare, Ventura, Yolo and Yuba.

The federal tax relief postpones various tax filing and payment deadlines that occurred starting on January 8, 2023. This includes:

• 2022 individual income tax returns due on April 18, as well as various 2022 business returns normally due on March 15 and April 18. These are now due on May 15, 2023. (Among other things, this means eligible taxpayers will have until May 15 to make 2022 contributions to their IRAs and health savings accounts.)
• The May 15, 2023, deadline also applies to the quarterly estimated tax payments normally due on January 17, 2023, and April 18, 2023. This means individual taxpayers can skip making the Q4 2022 estimated tax payment, normally due January 17, 2023, and instead include it with the 2022 return they file, on or before May 15.
• The May 15 deadline also applies to the quarterly payroll and excise tax returns normally due on January 31 and April 30, 2023. In addition, penalties on payroll and excise tax deposits due on or after January 8, 2023, and before January 23, 2023, will be abated as long as the tax deposits are made by January 23, 2023.

The state tax relief rules align with the dates of the federal rules and also cover estimated tax payments for the fourth quarter of 2022 and the first quarter of 2023.

Claiming deductions for disaster losses

For your California tax return, information and instructions on how to apply for a deduction for disaster-related costs can be found in FTB Publication 1034, 2022 Disaster Loss: How to Claim a State Tax Deduction.

When filing a return with a claim for the disaster-related deduction, write the name of the disaster in blue or black ink at the top of your tax return to alert the California Franchise Tax Board. If filing electronically, follow the software instructions to enter disaster information.

At the federal level, individuals, and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year) or the return for the prior year (2022, normally filed this tax season). Be sure to write the FEMA declaration number – 3691-EM − on any return claiming a loss. See Publication 547 for details.

We’re here to help

If you have questions about how tax relief for any storm-related losses you have incurred, we can help. Contact your JLK Rosenberger team member, or click here to contact us. We look forward to speaking with you soon.