Disaster Victims Should Document Losses Before Cleanup Begins

March 18, 2014

For Immediate Release

Contact: Gigi Thompson Jarvis, CAE

202.822.6232, x119                                           

gjarvis@naea.org

download a Word version of this pres release

Disaster Victims Should Document Losses Before Cleanup Begins

Washington, DC, (March 18, 2014) Weather predictions in the Farmer’s Almanac were validated this year with a national nightmare of record- high amounts of snow, and then the problems that resulted from all that snow melting. While unexpected weather events can be devastating to families and businesses, it’s good to remember that damage, destruction or loss of your property resulting from these or other sudden, unexpected events may be deductible on your tax return. The National Association of Enrolled Agents (NAEA) has advice for those dealing with disaster loss.  

“It is very important that people take pictures or videos and do a complete inventory of damage before the mess gets cleaned up,” notes Cynthia Jeanguenat, an enrolled agent in Virginia Beach, VA. “My experience tells me that after the cleanup process has begun, people do not remember what they threw away. Be sure to photograph the inside and outside of the house or business and as much personal property damage as possible.”

To organize a written inventory, Jeanguenat recommends IRS Publication 584, “Casualty and Disaster Loss Workbook.” She describes the booklet as “extremely helpful” in conducting a room-by-room inventory of damage. The workbook may be obtained by calling the IRS at 800.829.3676, or by visiting the IRS website at www.irs.gov.

A disaster loss is tax deductible to the amount over any insurance reimbursement, with two limitations: you must reduce each loss by $100; you must further reduce the total of all losses by 10 percent of the taxpayer’s adjusted gross income.

Tax deductions for buildings with structural damage require a qualified appraisal and records of the repairs to restore the building to its previous condition.

Jeanguenat cautions that all claims for damage must first be submitted to the property owner’s insurance carrier, even if the property is not covered, in order to take a casualty loss deduction.

For help with your particular situation or to retain professional tax assistance, consult an enrolled agent. Enrolled agents are America’s tax experts, licensed by the federal government to represent taxpayers before the IRS. They are the only federally licensed tax practitioners with unlimited rights of representation before the IRS. EAs provide tax preparation, tax advice, and tax planning services in addition to helping taxpayers resolve problems with the IRS. To find an enrolled agent in your area, call 1.800.424.4339 or visit the NAEA website at www.naea.org and click on “Find an EA.”