Tax Relief for Hurricane Katrina Victims
by: Iowa Legal Aid
Losing your household belongings, home and automobiles is considered a casualty loss for taxpayers. A taxpayer can often deduct these losses on his or her tax return in the year that the loss happens. The taxpayer has to itemize instead of using the standard deduction. Because of the losses you may not owe any taxes or you may owe less.
The President has declared many areas to be federal disaster areas because of Hurricane Katrina. There is a special rule for deducting a loss that occurs in a presidentially declared disaster area. To see if the county or parish you lived in is part of the declared area you can contact FEMA or look at their web site at www.fema.gov/news/disasters.fema. Taxpayers in the federal disaster area can actually amend their 2004 tax return and claim losses on that return even though the loss didn't happen in 2004. The rule is meant to help get cash into taxpayers' hands as quickly as possible. Instead of waiting until after January 2006 to file for a refund, you can get it now when you need it most.
Filing an amended return won't help everyone. Taxpayers who got a full refund of all the taxes kept from their paychecks in 2004 will not be helped by amending their return. Taxpayers who had to pay additional taxes when they filed their 2004 return or did not get a full refund may benefit. Taxpayers who have lost their homes and their employment may have less earnings to report on their 2005 return which means they may benefit more by amending their 2004 return to report their losses. Each taxpayer will have to look at their own situation to see whether they should amend their 2004 return or wait until they file their 2005 return.
What will you need to amend your 2004 return?
- A list of everything you owned and lost. In the list include:
- The original cost;
- The fair market value (what you could have sold it for) just before the hurricane; and
- The present value.
- A copy of last year's return. You can get a copy from the IRS if your records were destroyed or you don't have access to your copy.
Where can you get help with this and other disaster related problems?
Call 1-800-992-8161 or 515-282-8161 and ask for Iowa Lawyers for Disaster Relief at or apply in person at 1111 9th Street, Suite 230, Des Moines IA 50314-2527 from 8:30 a.m.-5: 00 p.m. Monday-Friday.
For tax help only:
- Contact the IRS Disaster Hotline 1-866-562-5227 (7 a.m. to 10 p.m. local time Monday-Friday) or visit your local IRS office.
- Get IRS Publication 2194 "Disaster Loss Kit" at www.irs.gov/pub/irs-pdf/p2194.pdf .
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