Level 6

Question

TX Tax Preparers and the TX Winter Storm

Forum|Forum|5 years ago
March 9, 2021
18 replies
42 views

I am a little confused as to the tax deduction available for Texans due to the freeze. It has been declared a federal disaster area (FEMA DR-4586).

I have heard differing opinions as to whether or not this qualifies for the ability of the taxpayer to take a loss (less $500) even if they do not itemize OR if the only deduction available is if you itemize and the loss (less $100) is subject to the 10% AGI limitation.

Opinions?

Thanks

ProSeries Professional

This topic has been closed for replies.

qbteachmt

Level 15

Isn't that a 2021 disaster? Are you working on 2020 taxes?

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M

msmith7305Author

Level 6

Yes, but a federal disaster loss is allowed in the year of the loss or the preceding year.

Taxpayer choice.

qbteachmt

Level 15

And they already know their total loss?

Read the IRS guidance, such as:

https://www.irs.gov/newsroom/irs-announces-tax-relief-for-texas-severe-winter-storm-victims

"Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either the year in which the event occurred, or the prior year. See Publication 547 for details.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684, Casualties and Thefts PDF and its Instructions. PDF

Affected taxpayers claiming the disaster loss on a 2020 return should put the Disaster Designation, "Texas – Severe Winter Storms," in bold letters at the top of the form. Be sure to include the disaster declaration number, FEMA 4586, on any return. See Publication 547 for details."

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qbteachmt

Level 15

Here's the Tax Topic:

https://www.irs.gov/taxtopics/tc515

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BobKamman

Level 15

But can you say "Text the Texas Tax Talk" 10 times real fast?

S

StephanieS

Level 3

I have the same question - were casualty losses sustained from the Texas storms subject to the 10% AGI limitations?

I don't see where legislation changed the date past an incident period of January 26, 2021, so it seems that the Texas storms would have a 10% AGI limitation.

However, I see editorials saying there isn't a 10% AGI limitation. And when I input it into ProSeries with a 2/11/2021 date, ProSeries is allowing it (but that could be input error on my part).

qbteachmt

Level 15

"And when I input it into ProSeries with a 2/11/2021 date"

Which is later than the provision.

"I don't see where legislation changed the date past an incident period of January 26, 2021, so it seems that the Texas storms would have a 10% AGI limitation."

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/is-the-texas-disaster-fema-4586-subject-to-the-10-agi-limitation/01/166087#M88915

Read that topic to see what was reviewed and how the CAA did not change anything, as pointed out. If you know of a bill newer than CAA that makes a change, please post that info here.

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