In Case Of Emergency, Read Blog

With Tropical Storm Bonnie heading towards the U.S., I thought I would post some financial preparedness tips for the public just offered by the Internal Revenue Service (IRS) and Consumer Reports.

On the IRS website, the agency posted “Four Tips on Preparing for a Disaster”:

Recordkeeping — Take advantage of paperless recordkeeping for financial and tax records. Many people receive bank statements and documents by e-mail. This method is an outstanding way to secure financial records. Important tax records such as W-2s, tax returns and other paper documents can be scanned onto an electronic format. You can copy them onto a ‘key’ or ‘jump drive’ periodically and then keep the electronic records in a safe place.

Document Valuables — The IRS has disaster loss workbooks for individuals that can help you compile a room-by-room list of your belongings. One option is to photograph or videotape the contents of your home, especially items of greater value. You should store the photos in a safe place away from the geographic area at risk. This will help you recall and prove the market value of items for insurance and casualty loss claims.

Update Emergency Plans — Emergency plans should be reviewed annually. Individual taxpayers should make sure they are saving documents everybody should keep including such things as W-2s, home closing statements and insurance records. Make sure you have a means of receiving severe weather information; if you have a NOAA Weather Radio, put fresh batteries in it. Make sure you know what you should do if threatening weather approaches.

Count on the IRS – In the event of a disaster, the IRS stands ready to help. The IRS has valuable information you can request if your records are destroyed. If you have been impacted by a federally declared disaster, you may receive copies or transcripts of previously filed tax returns free of charge by submitting Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, clearly identified as a disaster related request.

And, on Consumerreports.org’s Money Blog, a post titled, “Emergency-preparedness, tax-wise and otherwise,” recommends:

As we’re in the season of hurricanes, floods and natural disasters of all kinds, now is the time to consider your family’s disaster plan. While you stockpile bottled water and put fresh batteries in your flashlights, also consider the safety of your financial records. The IRS recently offered tips for keeping your financial records safe. We’d like to add a few of our own.

Go paperless. If you haven’t already, consider signing up for paperless statements from your bank and other financial institutions. (You may also avoid fees for paper statements—a troubling banking trend.) Scan your tax returns and save them to a portable drive that you can then store in a safe place. While you’re at it, Consumer Reports Money Adviser tells you which papers to keep and which to toss.

Make a record. Take photos and/or video of your valuables and store in a safe place away from home. This is important for insurance claims. The Insurance Information Institute, the trade organization representing the property and casualty insurance industry, offers a free home-inventory tool at KnowYourStuff.org. The IRS Disaster Losses Kit (PDF) provides information on filing disaster-related tax documents.

Have a current emergency plan. Aside from having your important papers in a safe place, you’ll want to know what you should do if a storm is on the way. Read our how-to guide so you’re prepared for any emergency. And check out why you might need flood insurance.

Contact the IRS if you’ve lost tax returns in a disaster. You can get copies of previously filed federal tax returns (PDF) for free. The agency also lists recent tax relief information by geographical area.