Hurricane Irene and Uncle Sam
We’ve all been busy the past week making do without power by preparing meals (and in my case coffee) on the BBQ, throwing out perishables, raking leaves, dealing with fallen trees, broken windows, flooded basements and, most of all, trying to remember how on Earth we ever functioned without cable and internet.
So, what does this have to do with taxes? Actually plenty for anyone that experienced any serious damage from Mean Irene. The IRS allows deductions for a casualty or loss relating to your home, household items or vehicles. The loss must be reduced by any salvage value, by any insurance or other reimbursement you receive and then by an additional $100 per casualty or theft event. Then add up all those amounts and subtract 10% of your adjusted gross income from the total to calculate your allowable casualty and theft losses for the year. Losses must be claimed as an itemized deduction on Form 1040, Schedule A.
There are of course additional rules and restrictions but that’s the gist of it. Get in touch with your accountant for more detailed information on how this unfortunate loss may turn into a small tax benefit.