Frankenstorm: A Tax Nightmare

October 30, 2012 — Leave a comment

Hurricane Sandy stands to be the fifth-costliest hurricane in U.S. history. Today’s estimates suggest “Frankenstorm,” will be responsible for $20 billion in damages and $10 – $30 billion in lost business.

While most households stocked up with provisions, non-perishables, flashlights, board games etc., once the power goes out you may want to consider spending some time making a disaster tax plan.  It’s not as romantic as playing card games around candle light, but it could save you a lot of time, stress and money when you file your tax return.
To learn the basics of payments/benefits and tax returns during a disaster, check out the IRS’s Disaster Assistance Self-Study page.
If you’d rather put this task on the shelf for a little while, then at least be aware of the following when filing disaster related casualty or theft deductables:

  • Documentation:  Like most thing’s concerning taxes, there is no such thing as too much documentation.  Scan all receipts for materials you believe may or already have been destroyed.  Take before/after pictures, or find old pictures if it’s too late.  Don’t forget about your shrubbery or trees – those can also be expensive to replace.  Whatever information you can gather on your damaged property, do so.  Likewise, make sure all of your files are stored electronically or safely in an area of the house less prone to damage.
  • Beware of Due Dates: Most disaster declarations have extended due dates, but the system is complex and obscure.  Many time-sensitive acts are also extended under Revenue Procedure 2007-56; you can see the list here.  The IRS should submit a press release indicating what the extensions for Hurricane Sandy will be soon.  If you were affected and plan to claim any losses you should keep your eye out for it.
  • Call (866) 562-5227 to speak to a specialist trained to handle disaster related issues.

Click here for a full list of resources from the IRS on disaster declarations.  Stay safe and happy Halloween!

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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