If a natural disaster hits, work with government agencies, employers, and insurance companies for assistance.
Protect Your Property
If you are being asked to evacuate the area and authorities allow you to enter your home, be sure to:
Collect your important financial documents along with your valuables. You will need them to file insurance claims, pay bills, and take care of family members. Important documents include:
- legal certificates
- wills
- powers of attorney
- insurance policies
- Social Security cards
- your checkbook
- bank account information
Call your insurance agent as soon as possible to find out exactly what to do and what information is required to make a claim. Take pictures and/or video of your damaged property if possible. 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.
Look to Relief Organizations
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. 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. The Red Cross can provide emergency shelter, meals, clothing, medical assistance, and referrals to government and nonprofit organizations for additional services.
Work With Your Employer
- If you foresee missing time away from work, be sure to contact your employer immediately.
- If you or a family member is injured, you need to begin the process of applying for any available employee-sponsored disability benefits.
- You also may be able to take advantage of the Family and Medical Leave Act if you are unable to return to work in the near future because you are caring for an injured family member. This law applies to companies with more than 50 employees.
Contact Creditors
As always, paying your bills on time protects your credit rating. But, considering the circumstance, your creditors might be willing to work with you on a delayed payment schedule if necessary.
- Be sure to prioritize your bills, keeping in mind that insurance policies and mortgage or rent payments are the top priority.
- You also might consider stopping some bills immediately. For example, you can contact your utility, telephone, and cable providers to halt services on the property you have vacated. Before cancelling the service though, make sure you ask about termination and reconnection charges.
Seek Available Tax Relief
For victims of natural disasters such as earthquakes, floods, and tornadoes, 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.