Natural Disasters and Taxes

by | Dec 1, 2018 | Toby Talks Tax | 0 comments

As a fellow canine, it’s hard to imagine other four-legged pals shaking and covering their eyes with their paws because of a natural disaster.  We dread natural disasters more than the mailman who doesn’t bring bones with his deliveries.  But a lot of times, we’re caught in situations we have no control over. With our tails tucked, we endure earthquakes, hurricanes, tornados, flash flooding, and occasionally a tsunami or two, depending on our where our cozy doghouses are located.  The natural disasters devastate our homes and businesses, leaving us confused, scared, and unsure about which steps to take when it comes to recovering from our losses.

After a natural disaster strikes, destroying those beloved bones, fancy collars, plush doggie daybeds, and gold-plated feeding dishes you were gifted on the day you were brought home, you need to dig into some chores right away. That’s because under certain circumstances, Uncle Sam allows you to deduct on your income tax return a portion of your losses arising from federally declared disasters.

Naturally there’s a whole list of commands you need to follow when claiming the deduction.  As a general rule of paw, you should immediately document all losses with photo proof, along with brief descriptions of the items and estimated costs of replacement.  If you’re so busy chasing around that you get sidetracked from that critical step, you could lose the potential to claim any damages or losses on your tax return later on.

If you think you qualify for tax relief because of a disaster, be sure to nose your way through documentation showing the original cost (or basis) of the property you lost, and head over to a calculator to tally up the total losses you faced.   And plan to chew on IRS Form 4684, Casualties and Thefts, for a few minutes when you’re pawing your way through your tax return.  That form should be included in your tax return when you file.

If you find yourself with your tail caught between your legs, in a frenzy chasing after the right documentation, or need help understanding how to figure totals for losses, yip for  the Law Offices of Christy Lee, P.C. We’ll help you navigate the complex forms to declare these painful losses, while reassuring you with a friendly, comforting cuddle from yours truly.