When you think about government help for disaster relief you probably think about FEMA, the Army Corps of Engineers, and the IRS. Wait the IRS? Yep, that’s right the IRS.
The Internal Revenue Service (IRS) is offering some victims of Hurricane Ike some much needed relief. The government will deduct uninsured losses from a taxpayer’s income, reducing the amount of taxes that are owed.
These losses can be claimed on this year’s tax return, due April 15, 2009; however, the government’s tax collection agency is also allowing residents of federally declared disaster zones to claim losses immediately by amending their 2007 tax returns.
Losses are calculated using the value of the property before the storm minus insurance payments and any assistance provided by the federal government to repair the property.
For example, a property owner with $50,000 in damage who received only a $40,000 insurance payment could claim the remaining $10,000 as a loss.
The loss must be further reduced by $100 and then by 10 percent of a taxpayer’s adjusted gross income before it can be claimed.
Property owners who get more money from their insurance policies than their property is worth are required to pay taxes on these gains or unless the money is used to purchase new property that is at least equal in value to the damaged property.
Taxpayers have up to four years to spend this difference before they are required to pay taxes on it.
To deduct these losses you will need to download and fill out the following froms.