Residents of Alabama whose homes and businesses sustained damage during Hurricane Dennis reportedly should not overlook the opportunity to get an income tax refund based on casualty losses incurred in the storm.
This could mean an immediate source of badly needed cash for some storm victims.
Refunds are available to qualified taxpayers in the disaster-declared counties for taxes paid on income for 2004 or 2005, whichever is most beneficial to the taxpayer.
Claiming the loss on a return for last year will produce an earlier refund, but claiming it for this year may, depending on income factors, produce a greater refund. These details are covered in IRS publication 547.
Taxpayers may deduct personal property losses that are not covered by insurance or other reimbursements, excluding federal disaster assistance, which is not taxed. The Internal Revenue Services (IRS) requires that they deduct $100 for each casualty event and subtract 10 percent of their adjusted gross income from the total losses.
Also, there is special tax relief for disaster victims, which also applies to relief workers, which includes filing extensions and relaxation of interest and late-filing penalties on returns or taxes for reasonable cause.
Those who do not live in the declared counties may claim a standard casualty loss on their 2005 returns if they sustained losses in the hurricane.
Taxpayers can download forms and publications from the IRS Web site at www.irs.gov. Answers to general tax questions are available at 1-800-829-1040.
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