News & Commentary

CASUALTY LOSSES DUE TO TROPICAL STORMS AND HURRICANES
SEPTEMBER 29, 2004

Many people have suffered personal and or business losses as a result of the recent tropical storms and hurricanes in Florida this year. Casualty loss deductions may be available for income tax purposes.

Taxpayers who have incurred damage to their property may have casualty losses that will be deductible on personal or business tax returns. Affected taxpayers in a Presidential Disaster Area also have the option of claiming disaster-related casualty losses on their federal income tax return for either this year (2004) or last year (2003). Claiming the loss on an original or amended return for last year may result in an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax savings.

The casualty loss deductions are subject to certain limitations. Personal losses are claimed as an itemized deduction and are reduced by $100 per casualty event as well as 10% of adjusted gross income. If your insurance deductible is high you may still exceed these threshold amounts. Business losses are not subject to this limitation. Personal and business losses are reduced by any insurance recovery received or anticipated. IRS Publication 547 (“Casualties, Disasters and Thefts”) provides guidance on the casualty loss deduction and IRS Publication 584 (“Casualty, Disaster and Theft Loss Workbook”) provides helpful worksheets for determining your loss. Both of these publications are included in No. 2194 “Disaster Losses Kit for Individuals”. The guides are available online or at your local IRS Taxpayer’s Assistance Center.

The IRS announced special tax relief for taxpayers in the Presidential Disaster Area that was struck by Tropical Storm Bonnie and Hurricane Charley beginning August 11, 2004. The Presidential Disaster Area was later amended to include additional counties affected by Hurricane Frances as well as extending the relief period to December 30, 2004. Therefore taxpayers in certain Florida counties including Lee, Hendry, Charlotte, and Collier generally will have until December 30, 2004 to file tax returns and submit tax or estimated tax payments. This relief does not apply to employment tax deposits. The IRS will abate interest and any late filing or late payment penalties that would apply.

For more information, visit the IRS at www.irs.gov. The Website includes information on available tax relief for recent natural disasters, as well as relevant publications for filing your return.

We hope you find this information useful. As this information cannot and should not be solely relied upon, we strongly recommend you consult with your attorney or CPA before making any tax decisions.


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