After a disaster, we strongly suggest you get a basic understanding of the relevant income tax rules as part of your financial decision-making process on the road to recovery.
Regardless of whether you prepared your own taxes before your loss or used a Certified Public Accountant (CPA) or Enrolled Agent (EA), now is the time to consult with an experienced professional. Casualty loss rules are a particularly complex part of the Internal Revenue Code, and it’s hard enough for the average person to understand them, let alone use take full advantage of them. We recommend contacting a CPA or EA who has worked with disaster survivors in the past. Discuss with them how they developed their skills in this area of the tax law. Or, if you have a tax professional you trust but this is their first time preparing a casualty loss return; ask him or her to consult with a colleague who has the necessary experience.
While there is no substitute for having an experienced professional evaluate your tax situation, here are our ten tips to consider as soon as possible after your loss and before making major decisions about rebuilding your home, replacing property and filing your tax return.
Tips and Information
- The Disaster Recovery Handbook & Household Inventory Guide Tax tips relating to Federally declared disasters can be found in Susan Knowles’ chapter in the Disaster Recovery Handbook.
- Tax Tips for Disaster Survivors
- Disaster Taxes Q&A (Schreiber 2021)
- Q&A from June 2009 Disaster Webinar
IRS Forms and Publications
- IRS Publication 547: Casualties, Disasters, and Thefts IRS Publication 547 describes the basic tax relief provisions applicable to disaster survivors.
- IRS Topic No. 515, Casualty, Disaster, and Theft Losses
- IRS Guidance on safe harbor
Links to Useful Websites