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Can Storm or Hurricane Damage be Claimed on Taxes?

by | Sep 20, 2022 | Blog |

Storms and hurricanes are a fact of life for many Americans. Whether you’ve suffered storm damage at your home or business, there are some important steps to take in the aftermath. In this blog, we’ll explore what happens on a tax return when an individual suffers storm or hurricane damage. We’ll also discuss whether these losses can be claimed on taxes and how much is allowed as a deduction if it does qualify for one.

Can storm damage affect or impact your taxes?

If you are the victim of a storm or other natural disaster, it can affect your taxes. If you have suffered a loss due to the storm, this may be deductible on your taxes.

Are there special tax benefits for those who have suffered casualties from a natural disaster?

If you suffer a casualty loss as a result of a natural disaster, you may be able to deduct the loss on your federal income tax return. You can also deduct any unreimbursed expenses that you had in the year of the disaster.

If your home was damaged or destroyed by a storm or other natural disaster and you are unable to live there, you may be able to deduct your mortgage interest payments for the portion of the year that it was unusable.

If you use your car while volunteering at a charity organization after a natural disaster strikes, then write off any out-of-pocket costs related to mileage driven on behalf of those organizations—as long as it isn’t reimbursed by them!

What are casualty losses?

As a general rule, casualty losses are not covered by insurance and are not the result of theft. In other words, if you’re claiming a casualty loss on your taxes, it means that something happened to your property (or as a result of someone else) that caused damage and/or loss.

Generally speaking, business-related expenses such as those related to work or research aren’t considered casualty losses; however, there may be exceptions depending on the circumstances surrounding your claim. For example: If you were working from home when a storm knocked out power in your area for several days and forced you to rent another apartment until repairs could be made at home, then any money spent during this period would be considered a casualty loss—even though it was related directly with conducting business. Conversely: If you own an office building where one tenant’s failure causes financial difficulty for all tenants in the building then this amount cannot be claimed as part of their individual tax return since they aren’t actually paying those costs themselves (rather they’re paying them indirectly through their rent payments).

How can you claim a casualty loss?

You can claim a casualty loss on your tax return if you have a personal residence and either:

  • You had to move out of your home for more than one year, or
  • You had to move out of your home for less than one year but repairs cost more than 10% of its pre-damage value.

For insurance purposes, the IRS considers a storm or hurricane as an “Act of God.” Your deductible loss will be reduced by the amount of any reimbursements or partial reimbursements you receive from insurance companies; however, any reimbursement money never received cannot be deducted in some cases.

You can’t claim casualty losses if they are covered by insurance. If an insurance company reimburses you for the full amount of your loss, don’t include any part of the reimbursement in your income. But if insurance or other compensation covers only part of your loss, you must reduce your loss by the amount of reimbursement when figuring how much you can deduct. You can still claim your deduction even if the insurance company hasn’t paid you as long as there is no question about whether you will receive payment. Then take into consideration that there may also be certain other rules that might limit the amount of your casualty loss deduction based on your income level.

If you receive insurance payments or other compensation for your loss, you cannot deduct the loss. The difference between what an insurance company pays and what you paid for a damaged or stolen item is not deductible as it is considered reimbursement for the property damage or theft.

If an insurance company reimburses you for the full amount of your loss, don’t include any part of the reimbursement in your income. But if insurance or other compensation covers only part of your loss, you must reduce your loss by the amount of reimbursement when figuring how much you can deduct. You can still claim your deduction even if the insurance company hasn’t paid you as long as there is no question about whether you will receive payment. Then take into consideration that there may also be certain other rules that might limit the amount of your casualty loss deduction based on your income level.

Once again, we hope that the information provided in this article has been helpful to you. If you have any questions or would like additional details about how to claim storm damage on taxes, please feel free to contact our legal experts here at The Holman Law Firm!

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