Income tax deadline extended for residents of disaster area

The deadline for filing income tax returns is looming, but residents of Cape Girardeau, Scott, Bollinger and the other 32 counties declared as disaster areas as a result of last month's flooding will get a break.

Instead of filing by April 15, individuals and businesses will have until May 19 to file their federal and state tax returns. The extension also applies to several other kinds of tax payments and filing deadlines, but does not include state sales tax payments, said David Griffith, spokesman for the Missouri Department of Revenue.

Missouri's extension is limited to income taxes because the state finds it is easier to make the deadlines the same, said David Griffith, a spokesman for the Missouri Department of Revenue.

"When [the IRS] give[s] an extension, the Department of Revenue follows along with what they do," Griffith said.

In addition to the extension, the IRS is also encouraging taxpayers with a substantial uninsured loss to take a casualty deduction. Only taxpayers who itemize deductions, however, are eligible and the loss must exceed 10 percent of a taxpayer's adjusted gross income.

The deduction can be made on the tax return filed for 2007, either by including it in an original return that has not been filed or by filing an amended return. Taxpayers may also wait and use the loss as part of their itemized deductions for 2008.

Returns that include a deduction for flood losses should have the disaster designation of "Missouri Severe Storms and Flooding" at the top of the form for expedited processing, the IRS said in a news release.

Deductions allowed on federal returns can have two effects on Missouri income taxes -- lowering income, which means lower taxes, and a smaller federal tax payment, which reduces a state deduction and can cause the amount owed to the state to increase.

"The word I got from our tax administrator is that whatever you see that happens through the federal side automatically flows to the Missouri side," Griffith said.

Flood victims will not owe income tax on disaster relief grants, whether provided by the government or a private agency, if the grants are designed to provide living expenses, repair or replacement of a personal residence or to repair or replace the contents of a personal residence, according to IRS rules and publications.

The federal and state tax returns, payments and other time-sensitive actions that can be delayed are:

• Federal and state income tax returns for individuals, corporations, estates and others that would otherwise be due April 15.
• State financial institutions tax returns.
• State tax year 2007 balance due payments.
• Individual and corporate estimated tax payments for the first quarter of 2008.
• Requests for automatic extensions for both federal and state income tax returns.

The extension applies not only to taxpayers who live or have their primary place of business in the counties declared eligible for disaster aid but also to anyone who has their books, records or tax professionals' offices located in the disaster area, according to a release issued by the IRS.

IRS computers automatically identify taxpayers in the disaster areas and apply automatic filing and payment relief. Taxpayers who need the extension but live or have a business outside the disaster area should contact the IRS disaster hot line at 866-562-5227.

Late fees and penalties for forms, payments and other items covered by the disaster declaration will be waived, as will fees for copies of previously filed tax returns. For Missouri state fees and penalties, if imposed in error, contact the telephone number or the e-mail address included on the notice, a state news release said.

rkeller@semissourian.com

335-6611, extension 126