With tax season ramping up, the Internal Revenue Service is working to ensure taxpayers are prepared for the coming months.
Recently, the agency announced that victims of the California storms are eligible for tax relief, including extended filing deadlines. In addition, the agency is working to spread the word to taxpayers about the difference between standard and itemized deductions.
What Californians should know
Taxpayers in California affected by the ongoing storms are getting some relief from the IRS. The agency has identified several key areas across the state where residents and businesses are eligible for the relief, all of which can be found on the Tax Relief in Disaster Situations page.
Ultimately, residents and businesses in affected areas now have until May 15, 2023, to make any payments or file returns.
This extension is valid for:
Business returns normally due on March 15 and April 18
Personal returns due on April 18
Quarterly estimated tax payments
Quarterly payroll and excise tax that are normally due on January 31 and April 18
The IRS explained that anyone living or operating a business in these affected areas will automatically qualify for this tax relief, and taxpayers shouldn’t worry about reaching out to the IRS.
Standard vs. itemized deductions
Taxpayers typically have the choice between using the standard deduction or itemizing their deductions, and whichever choice gives them the lowest tax is typically the best option.
The IRS explained that several factors can affect which route taxpayers go: changes to the current tax laws, changes to the taxpayer's current filing situation, or changes to the standard deduction. After that, several factors come into play for both itemized and standard deductions.
Itemized deductions can include:
Real estate and personal property taxes
Home mortgage interest
Unreimbursed medical and dental expenses that go beyond 7.5% of total income
Personal casualty and theft losses from a federally declared disaster
State and local income or sales tax
When it comes to standard deductions, certain factors can prohibit taxpayers from taking this option, including:
An individual who was a non-resident alien or dual-status alien during the year
A married individual filing as married but filing separately whose spouse items deductions (both spouses must itemize even on separate returns)
A tax return filed for a period of fewer than 12 months
The IRS explained that the standard deduction amount is also subject to change based on: whether the taxpayer is 65 years or older and blind, the taxpayer’s filing status, and whether the taxpayer is claimed as a dependent.
More information for taxpayers is available here.