Have You Suffered a Natural Disaster? The IRS Can Help!
Natural disasters come without any warning and can be absolutely devastating to your family. Whether it is a flood, a hurricane, tornado, or an earthquake, a natural disaster can hurt your home, your car, your keepsakes and have a lasting impact on your finances. Fortunately, the IRS allows you to recover some of the value of those lost items on your tax return. Surprising, maybe? But, if you and your family have recently been hit hard by a natural disaster, take note and take advantage of this benefit!
The IRS allows you to count unforeseen losses from a natural disaster as itemized deductions on your tax return. While this certainly does not take away the loss or bring your belongings back, it can really add up and provide a small bit of relief in the midst of a very stressful time.
What Qualifies as a Natural Disaster?
The IRS defines a casualty as the damage, destruction or loss of property resulting from a sudden, unexpected or unusual event. This can be a natural disaster or the result of a man-made disaster. Some of the most commons examples that meet the IRS criteria include:
- Storms (including ice storms and blizzards)
- Drought (must be sudden in nature)
Getting Ready to Submit Your Tax Return
Preparing for the April 15th tax deadline can be a bit overwhelming, especially after a trying and traumatic year. If you think that you meet the requirements to deduct some of the losses from a natural disaster on your return, you will need to use form 4684 and itemize your deductions using Schedule A. The IRS does not require you to submit supporting documentation with your return, but you should definitely keep this documentation on hand in case the IRS comes back to you with questions or in the event of an audit. Keeping these records is an extremely important part of this process.
Determining how much you are allowed to deduct can get a bit complicated. In a nutshell, the IRS says that you must reduce your overall loss by $100 and that the remainder (after deducting the $100) must equal more than 10% of your adjusted gross income (AGI). Finally, you also have to subtract any insurance refund you received for your losses.
Got that? Well, if you have questions about how to make this calculation, it may be a good idea to get a little help, even just for the year after a natural disaster. A tax firm can help you be sure that you submit an accurate return and at the same time, get the maximum possible deduction. Success Tax Relief has worked with clients who have suffered from a natural disaster and has experience helping them get the most out of their tax return. Contact us and let us help you. It certainly will not fix everything or bring back what you have lost, but you may find a small amount of relief knowing that you are getting at least something back.