Deducting Losses Due to Disaster

femaMany people reeling from the impact of hurricanes, super storms, fires, floods and other disasters this year may be wondering what, if any, relief they can get on their taxes.

In many cases, the answer will be disappointing. Congress generally has erected high barriers to deducting casualty losses.

But some victims of nature’s savagery may benefit from a little-known—and somewhat counterintuitive—tax-law twist designed to help those with losses in places that were declared as federal disaster areas by the president.

If you have questions regarding the value of your property contact the appraisers at www.scappraisals.com; they are certified FEMA inspectors.

First, here is a refresher course on deducting casualty and theft losses on personal-use property.

The big hurdle facing taxpayers is known as “the 10% rule.” Also watch out for the $100 rule. Here is how the Internal Revenue Service summarizes these rules in Publication 584:

“If the loss was to property for your personal use or your family’s, there are two limits on the amount you can deduct for your casualty or theft loss.

“1. You must reduce each casualty or theft loss by $100 [$100 rule].

“2. You must further reduce the total of all your losses by 10% of your adjusted gross income [10% rule].”

Read more at: http://online.wsj.com/article/SB10001424127887323401904578158963567403752.html

Disclaimer: for information and entertainment purposes only

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