A Posting on IRS Tax Relief for Businesses and Individuals

So many people are finding out that their insurance is not covering damages.  My wonderful CPA Rachel Beeten of Connelly and Beeten passed on some information to her clients which I post today.  She writes in her email the following summary:

"Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year (2010) or last year (2009). Claiming the loss on an original or amended return for last year (2009) can provide you with an earlier refund, but waiting to claim the loss on this year's return could result in a greater tax saving, depending on other income factors. In addition, there are favorable tax laws currently in effect that may or may not be available next year.   We will look at each individual's case to determine which tax year it will best to claim property losses - however most people will probably benefit by filing the losses on a 2009 amended (if you've already filed) or originally prepared return (if you haven't filed yet).  PLAN TO AMEND RETURNS AS SOON AS INFORMATION CAN BE GATHERED - IT WILL BE EASIER TO REMEMBER AND RETRIEVE INFORMATION."

No matter which year you choose to claim your losses, you will need the following to fill out all of the required IRS forms and schedules:          

• A list of all damaged property (include everything - buildings, appliances, vehicles, carpets, furniture, clothing). Be specific...in the case of a household filing: (ie, Maytag dishwasher, bedroom carpet, 4 kitchen chairs, 2 pairs jeans. The IRS will not accept "Misc Furniture" or "2 bags clothing") Do this as soon as possible -the sooner you prepare the list, the more you'll remember.  Get as many photos as possible - both before and after the flood.
• Cost of each  property listed above (keep any receipts you have)
• Value of each piece of  property listed immediately before the flood (consider if appraisals are necessary) - again you must be specific.
• Value of each piece of property after the flood - a lot of it will be zero.
• SAVE ALL RECEIPTS FOR REPAIRS AND REPLACEMENT PROPERTY.
• All communications from insurance companies about their reimbursements.

Attached is the IRS Disaster Losses Kit for Individuals:
http://www.irs.gov/pub/irs-pdf/p2194.pdf

And for Businesses: http://www.irs.gov/pub/irs-pdf/p2194b.pdf