Dealing with Natural Disasters: Action Steps Every Tax Preparer Should Recommend

With 2025 already bringing devastating wildfires, floods, hurricanes, and other calamities across the U.S., it's more important than ever for tax professionals to help clients prepare—both financially and from a tax perspective. A recent Journal of Accountancy article highlights practical steps individuals and businesses can take now to ease the burden of future disasters.

Why It Matters

A new AICPA survey reveals that one-third of Americans have taken no financial steps to prepare for natural disasters, even though more than two-thirds expect moderate to major financial impacts if disaster strikes. This underscores the critical role tax preparers play in advising clients on disaster readiness.

✅ Key Preparedness Measures for Your Clients

1. Plan Financially

• Encourage clients to build an emergency fund reserved for post-disaster expenses.

• Recommend they review insurance coverage to ensure adequate protection.

• Suggest documenting assets (via photos or video), which can help substantiate casualty loss claims.

  
  

2. Document & Reconstruct Records

• Advise clients to store critical documents safely—tax returns, deeds, Social Security cards in waterproof containers or safe deposit boxes.

• If records are lost, the IRS’s Disaster Relief Resource Center allows practitioners to request bulk return transcripts for reconstruction.

  
  

3. Understand Eligible Tax Relief

• Clients in federally or state-declared disaster areas may qualify for special casualty loss deductions: the AGI limitation can be waived, and losses over $500 can be claimed as standard deductions.

• IRS relief may include extended filing and payment deadlines, sometimes triggered by a state emergency declaration alone, depending on evolving legislation.

• Victims may access special tax-favored distributions from retirement accounts without the usual 10% early withdrawal penalty.

  
  

📋 How You Can Support Clients Now

• Share IRS guidance on Tax Relief in Disaster Situations, including FAQs and relief procedures.

• Help clients maintain photo/video inventories and compile receipts/insurance statements.

• Assist clients in analyzing whether they qualify for casualty loss deductions using adjusted basis, insurance payouts, and IRS Publication 584 worksheets.

• Monitor and interpret evolving legislation.

  
  

🔚 Final Insight: Be the Resource They Need

By incorporating disaster-prep conversations into your practice, you’re helping clients:

• Protect assets

• Expedite recovery

• Maximize tax relief

  
  

Your expertise can empower clients to not just survive—but financially recover—with greater clarity and confidence.

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Disclaimer: This article is for informational and educational purposes only and does not constitute legal tax advice. Advanced Tax Solutions is not liable or responsible for any damages resulting from or related to your use of this information. It is your responsibility to refer to official IRS documentation for information regarding any tax laws or tax information shown here.