Taxes are probably the last thing on your mind. However, with disasters comes property loss.
For a casualty loss in a federally declared disaster area, you can choose to treat the loss as having occurred in the year immediately preceding the tax year in which the disaster occurred. This can be a great way to get immediate relief instead of waiting for the tax year to end to get a refund check.
You may deduct casualty losses relating to your home, household items, and vehicles.
A casualty loss can result from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event, such as a flood, hurricane, tornado, fire, earthquake, or even volcanic eruption.
Federally declared disaster areas qualify for disaster loss treatment. Casualty losses are generally deductible in the year the casualty occurred (see above).
Personal use property casualty losses are deducted on Section A of Form 4684, Casualties and Thefts. Casualty losses of personal use property are deductible only to the extent that the amount of the loss from each separate casualty or theft is more than $100 and the total amount of all losses during the year is greater than 10 percent of your adjusted gross income.
A casualty loss is calculated as the lesser of:
The adjusted basis in the property before the casualty; or
The decrease in FMV of the property as a result of the casualty.
This amount is reduced by any insurance or other reimbursements received.
For more information on claiming the casualty loss deduction contact :
Gary B. Carbo,CPA at 718-263-4228
or visit out our website http://GaryTAX.com
IRS Publication 584, Casualty, Disaster, and Theft Loss Workbook at: http://www.irs.gov/pub/irs-pdf/p584.pdf