The IRS has special provisions for disaster tax relief. This is only for areas that the federal government confirms as disaster areas. But how can you take advantage of this? Learn more about disaster tax relief in this article.
Who Qualifies
For the 2012-2025 tax years, any lost or damaged property must be the result of a federally declared disaster to qualify as a deduction. Some of these events may include earthquakes, fires, floods, hurricanes, tornadoes, and volcanic eruptions. You can find a list of federal disaster areas at www.fema.gov.
How to Claim Your Loss
To claim your loss, you will need to utilize Form 4684-Theft and Casualty Loss Deduction. You will use this form to determine the amount you can deduct. To do this you much calculate the amount of your loss. This is done in three steps. First, you must determine your adjusted basis in your property before the disaster. Second, you must determine, because of the casualty, the fair market value of destroyed items. Third, you must choose the small of the calculation in steps one and two. From that amount, you must subtract reimbursements from insurance or other locations. The total is the amount you can claim as a loss on your taxes.
Help With Disaster Tax Relief
If you are unsure how to properly claim your disaster tax relief deductions, meet with a qualified tax professional. They can complete the calculations for you and properly fill out all the forms.
Questions? Want to schedule an appointment? Contact us by clicking here.