With snowstorms bearing down on the east coast this week, it’s a good time to focus on disaster relief available to taxpayers. Certain tax law provisions may help you to recover from a disaster. This may take the form of additional time to file returns and pay taxes without interest and penalty.
You may also be able to claim a casualty loss related to the disaster on your federal income tax return. A casualty loss is the result of “the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption.” In other words, normal wear and tear (like regular rains over time) doesn’t apply.
You usually claim a casualty loss in the year the disaster occurs. However, if the loss is in a federally declared disaster area, you may choose to treat the loss as having occurred in the year immediately preceding the tax year in which the disaster happened; you simply file an amended return.
Of course, when it comes to casualty losses, certain rules and restrictions apply. Check with your tax professional for more information.
For 2010, the IRS has indicated relief may be available for victims of the following disasters:
- North Carolina victims of September 2010 storms, flooding and straight-line winds
- Wisconsin victims of July 2010 severe storms, flooding and tornadoes
- Illinois victims of July 2010 storms and flooding
- Iowa victims of June 2010 severe storms, flooding and tornadoes
- Texas victims of Hurricane Alex in June 2010
- Kentucky victims of July 2010 storms and floods
- West Virginia victims of June 2010 severe storms and flooding
