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June 26, 2015

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Tax deductions for casualty losses: What steps should you take now?

Many Texans have been through calamitous weather conditions in recent months. Floods, tornadoes and storms have hit hard, causing extensive damage.

If you are one of the people who suffered storm damage, how will that affect your taxes? In this post, we will take note of some tips from the IRS for making good use of tax deductions for casualty losses.

Next year’s tax season is still months away. But the IRS recently issued a press release on disaster losses to help people start making the necessary preparations to maximize disaster-related deductions on federal tax returns.

An important part of these preparations is keeping good records. This enables you to maintain an accurate account of how much the damage you suffered from a natural disaster has cost you.

It is also important to realize that there are some very specific tax laws that apply to casualty losses. A good source of information on these is Publication 547 from the IRS.

Using this information, a knowledgeable tax attorney can guide you through the process of figuring out how your tax returns will be affected by storm damage.

For example, there are different rules for business property than for personal property when it comes to casualty losses. You may also be wondering about the role of insurance claims in getting reimbursed for your losses. And then there are the calculations required to determine the precise amount of your loss.

It is not too early to start thinking about these things. Doing so now will help point the way toward favorable tax treatment of your disaster losses.

Tax Controversy