(NewsUSA) – Floods, fire, tornados or earthquakes can be devastating to families and businesses. Did you know that damage, destruction or loss of your property resulting from these or other sudden, unexpected events may be deductible on your tax return?
The required document process does not need to be difficult, according to the National Association of Enrolled Agents (NAEA). Residents and business owners are advised to photograph and inventory any property damaged or destroyed during the disaster before cleaning or throwing articles away. Be sure to photograph the inside and outside of the house or business and as much personal property damage as possible.
“It is very important that people take pictures or videos and do a complete inventory of damage before the mess gets cleaned up,” noted Cynthia Jeanguenat, an enrolled agent in Virginia Beach, VA. She continued, “My experience tells me that after the cleanup process has begun, people do not remember what they threw away.”
To organize a written inventory, Jeanguenat recommends IRS Publication 584, “Casualty and Disaster Loss Workbook.” She describes the booklet as “extremely helpful” in conducting a room-by-room inventory of damage. The workbook may be obtained by calling the IRS at 800-829-3676 or by visiting the IRS website at www.irs.gov.
A disaster loss is tax deductible to the amount over any insurance reimbursement, with two limitations — you must reduce each loss by $100, and you must further reduce the total of all losses by 10 percent of the taxpayer’s adjusted gross income.
Tax deductions for buildings with structural damage require a qualified appraisal and records of the repairs to restore the building to its previous condition.
Jeanguenat cautions that all claims for damage must first be submitted to the property owner’s insurance carrier, even if the property is not covered, in order to take a casualty loss deduction.
For help with your particular situation or to retain professional tax assistance, consult an enrolled agent. Enrolled agents are America’s tax experts, licensed by the federal government to represent taxpayers before the IRS. EAs provide tax preparation, tax advice and tax planning services in addition to helping taxpayers resolve problems with the IRS.
To find an enrolled agent in your area, call 800-424-4339 or visit the NAEA website at www.naea.org and click on “Find an EA.”
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