For those taxpayers living in geographical zones prone to natural disasters, the IRS has published some disaster advice to help them avert financial disaster. To safeguard individuals and businesses against these disasters, the IRS suggests that they take four simple steps:
First is the creation of a backup set of records electronically. The backup records should be stored away from the original documents. With the statements or documents in an electronic format becoming increasingly accessible in electronic formats, this step could be accomplished with ease. Burning the files to an external hard drive or a CD is a good way to keep them safe and accessible.
The second suggestion has to do with the documenting of valuables. To do this, a taxpayer can photograph or videotape the contents of his or her home, especially items of a higher value. The IRS, in Publication 54, offers a disaster loss workbook that can help taxpayers organize a room-by-room list of belongings. This video or photographic
Next is an updated emergency plan. Whether the taxpayer lives in a disaster-prone area or not, it is always a good idea to have a plan in case of emergency. Plans should be updated regularly, as circumstances within families and businesses are constantly changing.
The final suggestion is to make sure a fiduciary bond is in place. According to the IRS website, employers who use payroll service providers should ask the provider if a fiduciary bond is in place. Having a bond could ensure that an employer would be protected in the event of default by the payroll service provider.
Disasters are hard to predict, but preparing for them could be easy. It is always a good idea to have backup documentation anyway, as the IRS could ask for them should any questions arise regarding your taxes unrelated to natural disasters.
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