Fast Tax Action for disaster area losses

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Fast tax action for disaster area losses With hurricane Harvey looming in on us they are certain things you should know. August is the middle of hurricane season for the eastern and southern coasts. Other regions of the U.S. experience tornados, floods, and wildfires. If you're victimized by a natural disaster this summer, you could experience dramatic financial and emotional loss. While it's devastating to face this kind of catastrophe, it's helpful to know you may be able to claim a casualty loss deduction on your tax return, even though the requirements are strict. If you live in an area that is deemed a federal disaster area, you may find faster tax relief. For starters, you may deduct a casualty loss for damage caused by an event that is "sudden, unexpected, or unusual." This includes destruction of property from natural disasters like hurricanes and even dented fenders or broken windshields from vehicle collisions. But you can't deduct casualty losses caused by gradual decay or deterioration, like damage from a summer drought. After you reduce your personal loss by any insurance reimbursements, the deductible amount is subject to two limits. 1. You can only deduct the excess above 10 percent of your adjusted gross income (AGI); and 2. You must reduce a loss by $100 for each event. For example, if your AGI is $100,000 and you suffer a $25,000 loss to your home after insurance reimbursements, your deductible loss is $14,900. Normally, you're required to deduct casualty losses in the year the event occurs. However, for a loss suffered in an area that's declared a federal disaster area, you can elect to deduct the loss on the tax return for the year immediately preceding the disaster. Therefore, homeowners with a loss due to a hurricane in 2017 might amend their 2016 return to obtain faster tax relief. The IRS requires you to submit detailed information with this special election. If you are faced with casualty loss from a disaster, call so we can go over the details. Please call us if you have any questions. 2016 Tax Extension Deadlines are approaching. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.