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Protecting Your Records from both Natural and Man-made Disasters

No matter where you live, disaster can strike at any time.  They can hit you at home, or at work.  Whether it is a tornado, hurricane, flooding, ice problems, fire, smoke, vandalism, theft, or other destruction, there are some simple steps that you can take to help make your road to recovery a little bit easier.  I encourage you to be proactive, rather than reactive.

         1.   Document Your Valuables:  Create a list of you assets and include your basis in the asset.  Then take pictures, videotape, or capture the images digitally.  This documentation may help to prove the value of your lost items for insurance claims or for casualty loos deductions.  Again, this can be done for your home or your place of business.

      2.   Obtain Copies of Records that were Lost or Destroyed:  These can be tax returns, bank statements, insurance policies, and the like.  For tax returns, you can ask for copies from you tax preparer or from the IRS.  If you prepare your own return and need a copy, you can go to IRS.gov and get Form 4506 – Copy of Tax Return.  If you just need information from your return, you can order a transcript online at irs.gov.  For bank statements, most bank provide them electronically.  For insurance policies, your insurance agent will be able to assist with both your claim(s) and your records requests(s).

      3.    Have an Emergency Plan:  You should have a plan in place for your home and for your business, in the case of an emergency or disaster.  If you do not have one, you should take the time to create one.  This will help keep you safe, as well as helping you recover faster, if your information is lost.  You should review your plan on an annual basis, at the least.  You should update as needed and as your situation changes.

      4.     Back up Your Records Electronically:  Keep extra copies of important records in an electronic format and keep them in a safe place, away from where you store the originals.  You can scan in hard copies of your records.  You should also back up your laptop, base system, or other device.

The back-up(s) will consist of external hard drives, CD’s, and DVD’s.  Preferably, you should keep your electronic records/back-up(s) at an offsite location.  Some people will use a safety deposit box at their bank.  You should back up your systems on a regular basis.  A schedule would help keep you on task.

      5.     The IRS Can Help:  For those individuals who do not have a plan in place and need help with tax issues, the IRS has a Disaster Hotline to help people with tax issues after a disaster. Call the IRS at 1-866-562-5227 to speak with a specialist trained to handle disaster-related tax issues.  In the event of a disaster, the IRS stands ready to help. Visit IRS.gov to get more information about IRS disaster assistance. Click on the “Disaster Relief” link in the lower left corner of the home page.

-Michael Hermanson, CPA | CGMA