Disaster Losses May Be A Tax Gain
http://www.iinc.org/articles/354/1/Disaster-Losses-May-Be-A-Tax-Gain/Page1.html
Published on 03/3/2010
An often-overlooked deduction may help turn a major property-casualty loss into a tax time gain. The standard deduction for unreimbursed casualty and theft losses allows taxpayers to include certain uninsured property losses among their itemized deductions.
In the past, qualifying for the disaster loss deduction meant that the taxpayer had to have sustained substantial financial losses. Insurance deductibles or gaps in insurance coverage -- from fire, flooding or earthquake, for example -- could qualify for tax deductions
Deduction Qualifications Eased for 2009 with National Relief Program
An often-overlooked deduction may help turn a major property-casualty loss into a tax time gain. The standard deduction for unreimbursed casualty and theft losses allows taxpayers to include certain uninsured property losses among their itemized deductions.
In the past, qualifying for the disaster loss deduction meant that the taxpayer had to have sustained substantial financial losses. Insurance deductibles or gaps in insurance coverage -- from fire, flooding or earthquake, for example -- could qualify for tax deductions.
For a short time, however, homeowners with losses from any federally-declared disaster may also qualify for additional benefits under federal legislation available only for the 2008 and 2009 tax years. The National Disaster Relief Act of 2008, allows all taxpayers, not just those who itemize, to claim a deduction for catastrophe losses regardless of their income level. The legislation also eliminates the requirement that taxpayers qualify for the deduction only if the disaster loss exceeds 10 percent of their adjusted gross income, plus $500. If the property is a trade or a business, slightly different rules may apply, so it’s important to seek assistance from a qualified tax preparer.
Homeowners who feel they qualify for these deductions should collect all receipts, insurance statements or other documentation and present it to a tax preparer. More information is also available at the “Non-Business Casualty and Theft Losses” section of the Internal Revenue Service Web site at www.irs.gov and the state Franchise Tax Bureau Web site at http://www.ftb.ca.gov.
IINC is a non-profit and non-lobbying trade association dedicated to helping the public understand insurance and manage risk. For more information, please visit www.iinc.org. IINC is also on Twitter at http://www.twitter.com/iinc and on Facebook at http://companies.to/iinc.
ADDITIONAL RESOURCES
Internal Revenue Service
Franchise Tax Bureau
National Disaster Relief Act of 2008
Federal Emergency Management Agency
An often-overlooked deduction may help turn a major property-casualty loss into a tax time gain. The standard deduction for unreimbursed casualty and theft losses allows taxpayers to include certain uninsured property losses among their itemized deductions. In the past, qualifying for the disaster loss deduction meant that the taxpayer had to have sustained substantial financial losses. Insurance deductibles or gaps in insurance coverage -- from fire, flooding or earthquake, for example -- could qualify for tax deductions
Disaster Losses May Be A Tax Gain
Deduction Qualifications Eased for 2009 with National Relief ProgramAn often-overlooked deduction may help turn a major property-casualty loss into a tax time gain. The standard deduction for unreimbursed casualty and theft losses allows taxpayers to include certain uninsured property losses among their itemized deductions.
In the past, qualifying for the disaster loss deduction meant that the taxpayer had to have sustained substantial financial losses. Insurance deductibles or gaps in insurance coverage -- from fire, flooding or earthquake, for example -- could qualify for tax deductions.
For a short time, however, homeowners with losses from any federally-declared disaster may also qualify for additional benefits under federal legislation available only for the 2008 and 2009 tax years. The National Disaster Relief Act of 2008, allows all taxpayers, not just those who itemize, to claim a deduction for catastrophe losses regardless of their income level. The legislation also eliminates the requirement that taxpayers qualify for the deduction only if the disaster loss exceeds 10 percent of their adjusted gross income, plus $500. If the property is a trade or a business, slightly different rules may apply, so it’s important to seek assistance from a qualified tax preparer.
Homeowners who feel they qualify for these deductions should collect all receipts, insurance statements or other documentation and present it to a tax preparer. More information is also available at the “Non-Business Casualty and Theft Losses” section of the Internal Revenue Service Web site at www.irs.gov and the state Franchise Tax Bureau Web site at http://www.ftb.ca.gov.
IINC is a non-profit and non-lobbying trade association dedicated to helping the public understand insurance and manage risk. For more information, please visit www.iinc.org. IINC is also on Twitter at http://www.twitter.com/iinc and on Facebook at http://companies.to/iinc.
ADDITIONAL RESOURCES
Internal Revenue Service
Franchise Tax Bureau
National Disaster Relief Act of 2008
Federal Emergency Management Agency