{"id":9238,"date":"2017-07-19T08:00:11","date_gmt":"2017-07-19T13:00:11","guid":{"rendered":"http:\/\/taxprocenter.proconnect.intuit.com\/?p=9238"},"modified":"2020-07-24T09:59:10","modified_gmt":"2020-07-24T14:59:10","slug":"helpful-tax-tips-for-clients-experiencing-a-disaster-loss","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/helpful-tax-tips-for-clients-experiencing-a-disaster-loss\/","title":{"rendered":"Helpful Tax Tips for Clients Experiencing a Disaster Loss"},"content":{"rendered":"

Suffering a disaster loss from a fire, storm or theft can be very traumatic for your clients and their families.\u00a0As their friend and trusted advisor, you can provide them with emotional support, financial guidance and help with the tax implications.<\/p>\n

Fortunately, the Internal Revenue Code allows taxpayers to deduct disaster losses, and that can help to ease the financial burden.\u00a0Please share these IRS tips<\/a> with your clients, or use the information to guide your clients in the aftermath of a disaster:<\/p>\n

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  1. Casualty loss.<\/strong> A taxpayer may be able to deduct a loss based on the damage done to their property during a disaster. A casualty is a sudden, unexpected or unusual event. This may include natural disasters such as hurricanes, tornadoes, floods and earthquakes. It can also include losses from fires, accidents, thefts or vandalism.<\/li>\n
  2. Normal wear and tear.<\/strong> A casualty loss does not include losses from normal wear and tear. It also does not include progressive deterioration from age or termite damage.<\/li>\n
  3. Covered by insurance.<\/strong> If taxpayers insured their property, they must file a timely claim for reimbursement of their loss. If they don\u2019t, they cannot deduct the loss as a casualty or theft. Reduce the loss by the amount of the reimbursement received or expected to receive.<\/li>\n
  4. When to deduct.<\/strong> As a general rule, deduct a casualty loss in the year it occurred. However, if taxpayers have a loss from a federally declared disaster, they may have a choice of when to deduct the loss. They can choose to deduct it on their return for the year the loss occurred, or on an original or amended return for the immediately preceding tax year.\u00a0This means that if a disaster loss occurs in 2017, the taxpayer doesn\u2019t need to wait until the end of the year to claim the loss. He or she can, instead, choose to claim it on the 2016 return. Claiming a disaster loss on the prior year’s return may result in a lower tax for that year, often producing a refund.<\/li>\n
  5. Amount of loss.<\/strong> Figure the amount of loss using the following steps:<\/li>\n<\/ol>\n