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A screen shot from Reuters.com, offering disaster answers.
A screen shot from Reuters.com, offering disaster answers.
Posted: March 17, 2013

Lingering effects of last year's Hurricane Sandy will extend to the tax returns of many thousands of individuals and businesses, and special tax rules apply to property owners in the official disaster areas.

"The IRS is here to help." Say what? That's part of a Reuters headline on an article about tax breaks for disaster victims. Mainly, some of the value of lost property is deductible in areas where the federal government has declared disasters. This applies to losses not covered by insurance, and there's a lot of math involved that will reduce the deductible amount depending on your income.

Qualifying disasters are listed at this page at the Federal Emergency Management Agency, or FEMA. Select a state from the pull-down menu and see a list of disaster declarations. New Jersey had three in 2012 - two related to Hurricane Sandy and one in connection with a severe storm June 30 that did damage over a swath of South Jersey. By the way, the site says Sandy survivors have until April 1 to register for FEMA disaster assistance.

A fulsome review of Sandy's impact, including a detailed description of how the storm formed out of a "tropical wave" off Africa and where it traveled from there, can be found in the National Hurricane Center's 157-page February report on the storm. The October storm caused 147 "direct deaths," the center said. It destroyed or damaged 650,000 U.S. homes, left 8.5 million utility customers without power, and left $50 billion in destruction.

For businesses, there is the "Disaster Resource Guide" from the IRS. The .pdf booklet is often referred to as the tax agency's "Disaster Losses Kit." The printable publication contains the forms needed to claim a casualty loss.

Another IRS page is organized with links for individuals, businesses, charities, and tax preparers. There are links to forms and publications and FAQs for disaster victims.

Speaking of tax preparers, the American Institute of CPAs posted a wrap-up of the tax rules and allowances directly affecting Hurricane Sandy victims. Included is a description of "leave-based donations," where a worker gives up vacation days or other time off in exchange for a donation from her employer to a charity. The charity has to be providing relief to Sandy victims. Such a contribution can be made through 2013.

Under the tax rules, you can claim 2012 disaster deductions on an amended 2011 tax return. Why do that? Because filing an amended return could get you a refund check right away. But is it a good idea? Kay Bell at Bankrate.com goes over the pros and cons.


Contact Reid Kanaley

at 215-854-5114, rkanaley@phillynews.com

or @ReidKan on Twitter.

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