Additional reporting by Teresa L. Clark.
With Hurricane Isaac bearing down on parts of the country this week, we know many of our clients and tax offices have been or will be affected by the storm. Our partners at the American Red Cross have already deployed trained disaster workers with relief supplies, opening shelters to assist those displaced by the storm.
Affected by the storm? Here’s what you need to know about casualty losses and your taxes:
If you’ve sustained property damage or loss, start the claims process by calling your insurance agent. Also, consult a tax professional for guidance on what types of damages qualify for casualty losses, which are tax-deductible, and how to claim the loss on a federal tax return.
The earlier insurance claims are filed, the sooner the reimbursement process can begin and your home can be restored to its pre-storm condition. Here’s how that happens:
- Insurance reimbursement information is needed to accurately calculate a casualty loss claimed on a tax return
- IRS disaster relief, in the form of extended tax deadlines, is generally offered to taxpayers in federally declared disaster areas qualifying for individual assistance
- The IRS will waive the usual fees and expedite requests for copies of tax returns for people who need them to apply for benefits or to file amended returns claiming disaster-related losses
- H&R Block clients – even do-it-yourself filers – can visit any office to request copies of their tax returns
- Taxpayers may be able to defer taxes on any gain from insurance proceeds by replacing damaged property with a like item
- Generally, property losses not covered by insurance are tax-deductible.
If you weren’t affected by the storm, Hurricane Isaac can serve as a reminder to all of us to make sure important financial documents are part of our emergency kits. The Federal Emergency Management Agency advises keeping insurance policies, deeds, property records, stocks, bonds and other critical documents in a safe deposit box. Paper copies of these documents, past tax returns and pictures/videos of valuables can be kept with disaster supplies in a fireproof, waterproof container for quick access in case of emergency. Scanning and saving these documents on a USB flash drive, CD or DVD allows for easier storage and portability. All taxpayers should ensure they have securely stashed away the tax and other financial documents they could need after a disaster strikes.
H&R Block is proud to be an American Red Cross Disaster Responder. Our donations ensure the Red Cross can respond immediately to threats like Hurricane Isaac so victims receive the help they need during and after crisis strikes. For more information on the American Red Cross disaster response or to help in your community, visit the Red Cross here.
[Image via The American Red Cross]