There’s no way to plan for a disaster, but did you know that the tax code will allow you to claim certain tax deductions for household damage due to hurricanes, floods, thefts, and vandalism? Obviously, good records will need to be kept and more paperwork necessary to fill out, but in most instances you’ll be able to count unforeseen damages as itemized deductions.
Keep in mind that when an area is deemed a major disaster area by the President of the United States, you’re afforded additional choices in terms of when you can file your claim, which could provide you needed assistance when you need it. Although you won’t likely be able to recover all your losses, every little bit helps.
Casualties are classified as the damage, destruction or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. These losses can be due to natural or man-made disasters and do not include losses where wear and tear were the main cause of casualty.
Remember, relief is available for uninsured home losses only and must be reduced by any settlements received, or expect to receive, from your homeowner’s or renter’s insurance policy.
For recent tax relief information released by the IRS, see the Tax Relief in Disaster Situations page. For instance, did you know that many victims of Hurricane Matthew qualify for late-filing penalty relief with the Oct. 17th deadline quickly approaching?
A very important tip to remember is to properly inventory your household contents. Publication 2194 is a disaster resource guide and workbook provided by the IRS to assist in filing for disaster relief, which includes schedules for listings contents such as clothing, jewelry and other valuable possessions on a room-by-room basis. Although inventorying your household contents is a daunting task, it’s extraordinarily easier than trying to remember details after contents have been stolen or destroyed and is generally a one-time task needing an update every so often.
Also, be sure to store a copy of your contents list somewhere safe and off-site such as a safety deposit box at your local bank.
At Verdeja, De Armas & Trujillo LLP, our team of Miami accountants is dedicated to providing personalized, financial guidance. We provide accurate and comprehensive financial statements as well as in-depth business analyses specific to your business or personal needs. Contact us today for a consultation!