Claim Flood Damage on Your Taxes
According to the IRS, “You may deduct the loss or partial loss of your home, household goods, and motor vehicles from disaster damage on your individual federal income tax return (pg. 7)." Here’s a link to the 2009 IRS Disaster Assistance document that details the process: www.irs.gov/pub/irs-pdf/p2194.pdf. If you have a specific question or are not sure how to proceed, there is a phone number to call for more information.
In the past, FEMA (Federal Emergency Management Agency) has opened offices in disaster areas to help people fill out tax forms and answer questions. It is still not clear whether FEMA will do this in Milwaukee.
Here’s an article that shows how the deduction calculation works: www.kiplinger.com/columns/ask/archive/2008/q0827.htm.
NOTE: Personal casualty losses are a deduction on your income tax return. They are deducted on form 4684 and Schedule A of your 1040. There is a $100 minimum and the losses need to exceed 10% of your adjusted gross income. Business or income producing property are deducted elsewhere, and are calculated differently. But they too are deductible. To deduct your loss you must be able to show that there was a casualty. You must also be able to support the amount you take as a deduction.
You need to be able to show the following:
• The type of loss—flood, and the date that it occurred;
• That the loss is a direct result of the flood;
• That you were the owner of the property or you leased the property from someone else;
• That you were contractually liable to the owner for the damage; and
• Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery.