The IRS confirmed yesterday that payments for lost wages, profits, and business income resulting from the oil spill are indeed taxable. Hope all those who were affected by the spill saved some of those payments…
The IRS said, it's important that people, if possible, budget for the tax liability on their payments from the claims fund.
Payments made in 2010 are payable from 2010 taxes, which are due April 18. Tax filings are normally due April 15, but because that is a Washington D.C. holiday -- Emancipation Day -- so everyone across the country is being given an extra three days for the tax filing deadline.
Payments from the Gulf Claim Fund made in 2011 would be paid on 2011 taxes, which are due in April 2012.
Dee Harris Stepter, spokeswoman for New Orleans IRS office, said the agency is encouraging people to check with their tax preparers in detail about the effect of compensation from the BP oil fund.
For those struggling with payment and collection issues, she suggested paying as much as possible by the April 18 deadline to minimize penalties and interest. For unpaid balances, Stepter said people can work out payment plans with IRS. People with questions can contact a Gulf oil spill tax assistance line: 1.866.562.5227.