BLOG Detail

Potential tax help for those suffering from Hurricane Sandy
Saturday, November 03, 2012

The key to deriving tax benefit is whether or not one sustained a "casualty loss", which is defined as a loss from a sudden, unexpected, or unusual event.  Clearly that criteria is satisfied in the case of Hurricane Sandy.  

There are technicalities when it comes to deducting casualty losses which I will not get into here.  Suffice it to say that if you have a significant casualty loss and you itemize (aka file Schedule A) you could be eligible for immediate tax relief from the IRS by amending your previous year's tax return. 

The language below, from the FEMA website, provides more detail:

"Taxpayers who have sustained a casualty loss from a declared disaster may deduct that loss on the federal income tax return for the year in which the casualty actually occurred, or elect to deduct the loss on the tax return for the preceding tax year. In order to deduct a casualty loss, the amount of the loss must exceed 10 percent of the adjusted gross income for the tax year by at least $100. If the loss was sustained from a federally declared disaster, the taxpayer may choose which of those two tax years provides the better tax advantage.

The Internal Revenue Service (IRS) can expedite refunds due to taxpayers in a federally declared disaster area. An expedited refund can be a relatively quick source of cash, does not need to be repaid, and does not need an Individual Assistance declaration. It is available to any taxpayer in a federally declared disaster area."
© 2012 Green Oak Financial Services | 617.615.6486 | info@greenoakfinancial.com