Natural Disasters

If a natural disaster hits, work with government agencies and insurance companies for assistance as follows:

Seek available tax relief for victims of natural disasters (earthquakes, floods, and tornadoes, for example). There are federal income tax deductions that may be able to offset some of the financial loss. Casualty losses are deducted on Schedule A as an itemized deduction. After the first $100 of loss, which is nondeductible, the remainder of a loss that is not reimbursed by insurance is allowed to the extent that it exceeds 10 percent of a taxpayer’s adjusted gross income (AGI).
If the president declares an area affected by a natural disaster a Federal Disaster Area, there are automatic extensions of the time for filing tax returns and paying taxes, waived penalties for late filing and payment of taxes, and special mailing addresses for faster processing of tax returns from disaster victims. Under normal circumstances, a casualty loss is deducted on your tax return for the year in which the event occurred. However, in areas which the president has declared to be a Federal Disaster Area, victims have the option of taking their entire loss on their prior year’s tax return. If they have already filed a prior year return, they can file an amended tax return on Form 1040X to get a refund to help pay for disaster-related expenses. The IRS recommends writing “Disaster, (name of city or county and state)” in red ink at the top of the 1040X form. For additional information, consult IRS Publication 584, call 1-800-829-1040, or visit www.irs.gov.
Contact the Federal Emergency Management Agency (FEMA) field office, established following a natural disaster, for assistance. Federal funds are distributed after the president declares an area a Federal Disaster Area. Grants and loans are determined on a case-by-case basis, depending on factors such as financial need. See www.fema.gov for details. Disaster victims must complete an application and receive a registration number, which is required to make a claim.
Another organization known for its capacity to assist disaster victims is the American Red Cross (www.redcross.org). The Red Cross can provide emergency shelter, meals, clothing, medical assistance, and referrals to government and nonprofit organizations for additional services.
Call your insurance agent as soon as possible to find out exactly what to do and what information is required to make a claim. Leave a contact phone number if your home is uninhabitable and you are staying elsewhere.
Separate damaged and undamaged items until a claims adjuster inspects them. Protect your property from further damage by making temporary repairs (such as putting a tarp over a damaged roof).
Save all receipts for repairs and temporary lodging to submit to your insurance company. If you are not fully reimbursed for these expenses, they may be tax-deductible.
Keep copies of all correspondence with the insurance company and provide them with a detailed list of damaged property. The claims process will be much easier if you take the time, before a natural disaster occurs, to photograph or videotape the contents of your home and list the brands and serial numbers of appliances and electronics equipment.

If a natural disaster hits, work with government agencies and insurance companies for assistance as follows:

Seek available tax relief for victims of natural disasters (earthquakes, floods, and tornadoes, for example). There are federal income tax deductions that may be able to offset some of the financial loss. Casualty losses are deducted on Schedule A as an itemized deduction. After the first $100 of loss, which is nondeductible, the remainder of a loss that is not reimbursed by insurance is allowed to the extent that it exceeds 10 percent of a taxpayer’s adjusted gross income (AGI).
If the president declares an area affected by a natural disaster a Federal Disaster Area, there are automatic extensions of the time for filing tax returns and paying taxes, waived penalties for late filing and payment of taxes, and special mailing addresses for faster processing of tax returns from disaster victims. Under normal circumstances, a casualty loss is deducted on your tax return for the year in which the event occurred. However, in areas which the president has declared to be a Federal Disaster Area, victims have the option of taking their entire loss on their prior year’s tax return. If they have already filed a prior year return, they can file an amended tax return on Form 1040X to get a refund to help pay for disaster-related expenses. The IRS recommends writing “Disaster, (name of city or county and state)” in red ink at the top of the 1040X form. For additional information, consult IRS Publication 584, call 1-800-829-1040, or visit www.irs.gov.
Contact the Federal Emergency Management Agency (FEMA) field office, established following a natural disaster, for assistance. Federal funds are distributed after the president declares an area a Federal Disaster Area. Grants and loans are determined on a case-by-case basis, depending on factors such as financial need. See www.fema.gov for details. Disaster victims must complete an application and receive a registration number, which is required to make a claim.
Another organization known for its capacity to assist disaster victims is the American Red Cross (www.redcross.org). The Red Cross can provide emergency shelter, meals, clothing, medical assistance, and referrals to government and nonprofit organizations for additional services.
Call your insurance agent as soon as possible to find out exactly what to do and what information is required to make a claim. Leave a contact phone number if your home is uninhabitable and you are staying elsewhere.
Separate damaged and undamaged items until a claims adjuster inspects them. Protect your property from further damage by making temporary repairs (such as putting a tarp over a damaged roof).
Save all receipts for repairs and temporary lodging to submit to your insurance company. If you are not fully reimbursed for these expenses, they may be tax-deductible.
Keep copies of all correspondence with the insurance company and provide them with a detailed list of damaged property. The claims process will be much easier if you take the time, before a natural disaster occurs, to photograph or videotape the contents of your home and list the brands and serial numbers of appliances and electronics equipment.