Tax relief for those in disaster areas
If you live in an area hit by a natural disaster, and your community or region is declared a major disaster area by the President of the United States, it means that a number of federal programs and funding are available to individuals, business owners, state and local governments, and certain private nonprofit organizations, to help in the recovery from the effects of the disaster, according to the Federal Emergency Management Agency (FEMA).
In association with such a declaration, individuals and businesses in the affected area may qualify for tax relief from the Internal Revenue Service (IRS). According to FEMA, such tax considerations may include:
- If your property is damaged or destroyed from a declared disaster (called a casualty loss), you may deduct that loss on the federal income tax return for the year in which the casualty occurred. Or, you can deduct the loss on the tax return for the preceding tax year. You may choose which of those two tax years provides the better tax advantage, but any reimbursement you receive from insurance cannot be deducted from your taxes. Remember, this does not include normal wear and tear or progressive deterioration, says the IRS.
- The IRS can accelerate refunds due to taxpayers in a declared disaster area. This can be helpful to individuals because a refund can be a quick source of cash, does not need to be repaid and does not need an Individual Assistance declaration, according to FEMA.
- The IRS may also postpone certain tax filing deadlines for taxpayers who reside or have a business within the disaster area.
For more information about tax relief, visit the following government pages:
- Tax Relief in Disaster Situations
- Disaster Assistance and Emergency Relief for Individuals and Businesses
Please note that the offering insurance company or its agents and representatives cannot give legal or tax advice. The brief discussion of taxes on this page may not be complete or current. The laws and regulations are complex and subject to change. For complete details consult your attorney or tax advisor.