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Tax
Q: Should tax returns be filed on behalf of my missing relatives?
A delay in obtaining a death certificate may have important tax consequences. If your missing relative has not been officially declared deceased, consult a professional tax advisor. If your missing relative were to be treated as living, regular tax returns might be required on his or her behalf.
Should tax returns be filed on behalf of my deceased relatives?
Yes. If not filing a joint return, a final tax return should be filed by the "executor" or the "personal representative" or other administrator of the estate of the deceased person, appointed by the Court. Such administrator may seek professional assistance, such as that offered by the September 11th Legal Relief Initiative Hotline at (212) 382-4763.
Can I file a joint tax return with my missing or deceased spouse?
Yes. However, you should identify on the top of the return that you are doing so.
What income taxes are my deceased relatives required to pay?
The Victims of Terrorism Relief Act of 2001, signed into federal law on January 23, 2002, forgives the federal income tax liabilities of individuals who died as a result of the WTC disaster for 2000 and 2001 (both the tax year in which death occurs and the previous tax year). If the victim did not pass away until 2002, income tax is refunded for the years 2002, 2001 and 2000. The Act provides each such victim with a minimum total refund of $10,000. The relief applies only to income that belonged to the victim. Please consult IRS Publication 3920, Tax Relief for Victims of Terrorist Attacks, or a tax advisor to determine the relief available to a surviving spouse filing a joint return.
Surviving spouses or executors filing tax returns on behalf of individuals who died as a result of the WTC disaster may file amended tax returns for 2000 until April 15, 2004, and may claim the tax relief for 2001 when they file the decedent's return. If you are claiming this relief for a deceased victim, mark "Killed in Terrorist Attack (KITA) - 9/11) on the top of any amended or original tax return and send them to the IRS, P.O. Box 4053, Woburn, MA 01888. If using a private delivery service, send the returns to the IRS, 310 Lowell St., Stop 661, Andover, MA 01810. For more information, contact the IRS at (866) 562-5227.
IRS Publication 3920, Tax Relief for Victims of Terrorist Attacks, also sets forth provisions for claiming refunds. This publication is available from the IRS at (866) 562-5227 or at www.irs.gov/pub/irs-pdf/P3920.pdf.
I received monetary relief for my losses in the WTC disaster. Is this money taxable?
The Victims of Terrorism Relief Act of 2001 treats the following types of income as tax-free: (1) payments by charitable organizations made because of the death, injury, wounding or illness of an individual that resulted from the WTC disaster; (2) debt cancellations, in whole or in part, made on or after September 11, 2001, and before January 1, 2002, but only if the debt was cancelled because the individual died as a result of the WTC disaster; (3) qualified disaster relief payments covering personal, family, living or funeral expenses or covering the repair of a personal residence (but relief provided by a federal, state or local government or agency is tax-free only to the extent that any expense for which it is used is not covered by insurance or otherwise); (4) certain disability payments received in tax years ending after September 10, 2001, for injuries sustained in the WTC disaster; and (5) certain death benefits paid by an employer to the survivor of an employee who died as a result of the WTC disaster, whether paid in installments or in a lump sum and even if the payments were made to self-employed individuals.
What estate taxes are my deceased relatives required to pay?
The Victims of Terrorism Relief Act of 2001 reduces the estate tax of individuals who died as a result of the WTC disaster. The Act effectively exempts the first $8.5 million of an estate from federal estate tax and the first $3 million from state estate tax.
When should estate tax returns be filed?
You should consult a professional tax advisor regarding applicable deadlines. Generally, federal and New York state returns for the estate of a deceased person are due nine months after the date of death. Thus, for an individual who died on September 11, 2001, returns would be due by June 11, 2002. Extensions for filing are generally available, although taxes should be paid on time to avoid interest and penalties. Estate tax returns should be filed by the administrator of the estate.
When should personal income tax returns be filed?
Most employees are required to file their federal, New York State and City personal income tax returns for the calendar year 2001 by April 15, 2002. Extensions are generally available upon timely request. However, you may be required to file and pay estimated taxes earlier (for example, if you are self-employed or your employer did not withhold income taxes throughout the year).
Have federal income tax return filing deadlines been extended?
Soon after the WTC disaster, the IRS extended certain filing deadlines for "affected taxpayers," who are defined as victims of the WTC disaster (including missing individuals), individuals whose principal residence or place of employment is located
in the five boroughs of New York City, relief workers assisting in the five boroughs of New York City, individuals whose records
are unavailable due to the disaster, and spouses of any of the above "affected taxpayers," but only with regard to the filing of a joint return. Most of these extended deadlines, which related to filing deadlines for 2000 tax returns on extensions or payments of installment taxes for 2001, have already expired.
In Publication 3920, Tax Relief for Victims of Terrorist Attacks, the IRS has indicated that it
may further postpone filing tax deadlines for "affected taxpayers" for up to one year. If
such further postponements are offered, they will be publicized by the IRS. For more
information, consult IRS Publication 3920 and IRS Notices 2001-61 and 2001-68
at www.irs.gov.
How should I mark documents I send to the federal tax authorities?
If you qualify for an extended federal deadline, you should (a) mark in red ink "WTC - September 11, 2001 - Terrorist Attack" at the top center of any late filed return, extension, estimated tax voucher or other document, and (b) include a brief explanation of the circumstances affecting your ability to meet the normal tax deadline.
Have New York State tax return filing deadlines been extended?
The New York State Department of Taxation and Finance, the agency that administers both New York State and New York City personal income tax, has issued notices (Important Notices N-01-14 and N-01-16) which extend, for eligible individuals, all NY State and City personal income tax filings, payments and other deadlines. Many of these deadlines have already expired.
When should I file my New York State tax return if the corresponding federal tax return is due later?
The IRS and the New York State Department of Taxation and Finance disaster relief programs provide different extended filing dates. Your New York State personal income tax return may be due earlier than your federal income tax return, but your federal return contains information you need to complete your New York State return. In Important Notice N-01-19, the New York State Department of Taxation and Finance announced penalty relief for late filings and late payments of income tax under these circumstances, but did not extend the deadlines for filing and payment of income tax. If you are not eligible for the relief provided in Important Notices N-01-14 and N-01-16. but are eligible for the penalty relief described in Important Notice N-01-119, mark "WTC Federal Extension" on the top center of the front page of any late filed return. If you are eligible for the relief provided in Important Notices N-01-14 and N-01-16, mark "WTC" on the top center of the front page of any late filed return and include a brief explanation of how the WTC disaster affected your ability to meet tax deadlines.
Is there any additional tax relief for which I might qualify if my property has been damaged or lost?
If you suffered property losses because of the WTC disaster you may get a quick tax refund by claiming your losses on an amended Federal income tax return for the year 2000. By amending the 2000 return (rather than waiting to file a return for 2001), you can get a refund in a few weeks. You must reduce the amount of loss by any insurance or other reimbursements received or expected. Tax forms and publications with additional details about this are available through www.irs.gov or by calling (866) 562-5227.
Where can I get more tax related information?:
The IRS handles inquiries from taxpayers whose ability to meet their federal tax obligations has been affected by the WTC disaster by phone at (866) 562-5227, Monday through Friday in English (7 a.m. to 10 p.m.) and Spanish (8 a.m. to 9:30 p.m.). Other sources of information include the following:
- The IRS: www.irs.gov/relief/index.html or (866) 562-5227;
- New York State: www.tax.state.ny.us or (800) 225-5829;
- New York City: www.ci.nyc.ny.us/html/dof/html/fm_wtc.html, or (718) 935-6000/9500.
