If you live in Hurricane Zeta's path, your family's personal safety is your number one concern during the storm. But once the hurricane has passed, your primary concern might be dealing with property damage from high winds or flooding. If that's the case, the tax law can offer some help. Personal casualty losses of individuals are deductible to the extent that they are attributable to a federally declared disaster area. This encompasses areas devastated by hurricanes, earthquakes, major flooding, blizzards, tornadoes, wildfires and other events.
If your house, car or belongings are damaged or destroyed as a result of a federally declared disaster, you may qualify for a tax break to offset losses that aren't covered by insurance when you file a claim. Generally, only taxpayers who itemize deductions can take a tax write-off for damage to personal property. And there are two important offsets that apply. More liberal rules apply for taking the deduction for and federally declared disasters.
To compute and report casualty losses, you need to fill out IRS Form You must enter the FEMA disaster declaration number on that form. Find a list of federally declared disasters and the declaration numbers at fema. And with an active hurricane season, you can expect many may incur damage to their homes and personal property.
Here is what you need to know about claiming a hurricane loss on your tax return. If your home or personal belongings are destroyed or damaged by a hurricane, you may be able to claim a loss, known as a casualty loss, on your tax return. A casualty loss is a result of any property damage that is sudden, unusual or unexpected. For example, a loss from a hurricane, earthquake or tornado would qualify as a casualty loss.
However, a loss over time due to the normal wear and tear, such as damage from termites, would not qualify as a casualty loss. For tax years to , your hurricane loss must be attributable to a federally declared disaster to claim it on your tax return.
A federally declared disaster is authorized by the president to provide federal disaster assistance for a certain area. For property that is partially destroyed or personal-use property, the amount of your hurricane loss is the smaller of these two amounts:.
After determining the amount of your loss, you would need to subtract any insurance or reimbursement you received or expect for the property from the smaller amount to determine your loss. In some cases, you may also need to report a casualty tax gain from reimbursement. If you receive a reimbursement that is more than the adjusted basis of your property, you may have a tax gain. You may have to pay taxes on the reportable gain.
If this is the case, it is good to speak with a tax professional for assistance. Any hurricane losses that occurred within the taxable year are reported on Form , Casualties and Thefts. This form will guide you through the amount you can claim. You must itemize your deductions on Form , Schedule A to report your loss. Itemized deductions are certain qualified expenses that reduce your taxable income.
There are certain losses , where these rules may not apply. Speak with a tax professional to help assist you with your casualty losses. Generally, you can claim your hurricane loss resulting from a federally declared disaster in the disaster year or the year preceding the disaster. Claiming a loss in a prior year, may reduce your taxes for that year and generate a tax refund sooner. If you choose to claim your loss in the prior year, you have six months after the due date of your original tax return for the disaster year.
For example, you have until Oct. After a hurricane, one of the major challenges you may face is reconstructing your records. But documenting your damages is essential to claim your loss on your tax return. The IRS provides many tools you can use to help reconstruct your records. Skip Navigation. Key Points. A pair of large storms hit the Gulf of Mexico this week. Thinking of writing off your damages to your home on your tax return next year?
You must itemize and you can only claim losses if the damage stems from a federally declared disaster. In all, , taxpayers filed returns claiming casualty and theft losses on their tax returns, according to the IRS. Paul Humphrey, of New Orleans, loads supplies on Aug. Gulf Coast this week. VIDEO Firefighters work to protect homes threatened by wildfires in Boulder Creek, California, on Aug.
There are two other hurdles you need to overcome. Here are four suggestions to get your household finances ready for a storm.
0コメント