Accidents and natural disasters can wreak havoc on your life. But, as you pick up the pieces in the aftermath of tragedy, know that you may be eligible for tax relief.
Depending on your situation, you may qualify to deduct your losses. Casualty losses are defined as property damage, destruction, or loss caused by an identifiable event that is unusual, sudden, or unexpected. In plain English, a casualty loss could include a house fire, hurricane damage, home invasion, or other accident. Disaster losses encompass any casualty loss that occurs in a federally declared disaster area.
The deductible loss on each item is the lesser of either its fair market value or its cost. By adding together the deductible loss on each item, you can determine the total casualty loss for tax purposes. However, please be aware that items covered by insurance generally may not be deducted: The amount of any insurance reimbursement must be subtracted from the total casualty loss.
Taxation Solutions, Inc. can help you sort through the complexities of claiming casualty loss deductions on your tax returns. We are here to help taxpayers in Cincinnati and beyond overcome tragedy. We are standing by to provide assistance for all of your tax problems, so don’t hesitate to contact us today!