If you have been effected by Hurricane Irene, or the rains of this week, the last thing you probably want to think about is taxes. You want to get back into your house, repair all the water and wind damage, replace your personal property, and get back to work.
However, if you do not have money to pay for those things and have not received guarantees from your insurance company or FEMA that you will receive the money to cover your losses, you need to think about how you might get some of the money from a tax refund or by paying lower taxes for the year 2011.
You can claim your tax deduction on next year’s tax return or you are permitted to amend the tax returned you filed April 15th of this year and claim the deduction on last year’s return and get money even more quickly!
The IRS states:
” IRS Disaster Assistance
Federally Declared Disaster Area
You may deduct the loss or partial loss of your home, household goods, and motor vehicles from disaster damage on your individual federal income tax return. If you paid taxes in the tax year immediately preceding the tax year in which the disaster occurred, you can choose to deduct your loss on a Form 1040X (Amended U.S. Individual Income Tax Return) for the prior year instead of waiting to file your current year return. This will allow you to receive a refund of some or all of the taxes paid on your prior year return.
What this means to you…
If you filed a federal income tax return in the preceding tax year and paid federal taxes …
o You may be able to file an amended return now (or wait until next year) to claim your loss and receive a refund of the amount of taxes paid.
o You need to itemize using Form 1040 Schedule A.
To claim your losses…
Make a list of everything you owned and lost
Determine its original cost (or adjusted basis)
Determine the fair market value of each item
o This is the amount it could have been sold for just before the disaster
Determine the present value – after the disaster
Determine insurance or other reimbursements you received or expect to receive
To take advantage of casualty losses and to assist you through this
Get Publication 2194, Disaster Loss Kit for individuals or Publication 2194-B Disaster Loss Kit for businesses.
Get computer generated copies of your last year’s tax return from the IRS.
IRS can assist with preparing your amended tax returns.
For additional information and assistance…
IRS Disaster Assistance Hotline – 1-866-562-5227 (Monday – Friday from 7:00 am to 10:00 pm local time), *Please have your own interpreter, if needed, when calling the Hotline number”
Visit the website at http://www.irs.gov or Contact your tax professional”
So where do you start? To get a downloadable copy of IRS Publication 2194 immediately go to www.irs.gov/pub/irs-pdf/p2194.pdf
The most important thing is to document, document, document. Take pictures, make lists of what you have to throw out and replace.
The IRS has created checklists to help you think of the types of items that may been destroyed or damaged. You can get a downloadable copy of IRS Publication 584, Casualty, Disaster and Theft Loss Workbook that contains the checklists at www.irs.gov/pub/irs-pdf/p584.pdf.
If you need assistance and don’t already have a tax professional, make an appointment with Guy De Sapio who can help you with the process
Gaetano M. De Sapio, Esq.