IRS Relief for Flood Victims
June 30, 2008
Per RSM McGladrey's Tax Ideas E-alert
Victims of recent severe storms, tornadoes and floods in Iowa may qualify for tax relief from the Internal Revenue Service. The IRS is postponing until July 28 certain deadlines for taxpayers who reside or have a business in the disaster area. The postponement applies to return filing, tax payment and certain other time-sensitive acts otherwise due between May 25 and July 28. In addition, the IRS will waive the failure to deposit penalties for employment and excise deposits due on or after May 25 and on or before June 9, as long as the deposits were made by June 9.
Casualty Losses
Affected taxpayers in presidentially declared disaster areas have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year's return could result in a greater tax saving, depending on other income factors.
Individuals may deduct personal property losses that are not covered by insurance or other reimbursements, but they must first subtract $100 for each casualty event and then subtract 10 percent of their adjusted gross income from their total casualty losses for the year.
Taxpayers whose losses are insured should qualify for gain deferral under the involuntary conversion provisions of the tax code, as long as the insurance proceeds are reinvested in suitable replacement property within the time proscribed by the IRS.
For more information on this topic, contact your local tax professional.
Circular 230 notice: Any advice contained in this message is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer
