- Days left

Claiming Tax Deductions for Weather Damage

Home damaged by weatherDid your roof collapse under the heavy weight of the snow? Did lightning strike your guest house? You probably know that insurance can protect your home and possessions during damaging weather (which we've had a lot of this year), but did you know that you may claim tax deductions for weather damage?

Here are some key points that came out of a recent conversation with the IRS.Weather-Related Damages Must Meet the Definition of a Casualty Loss

As long as the weather-related damage meets the definition of a casualty loss -- which is something that happens suddenly and unexpectedly as opposed to something that happens gradually -- you can take the deduction. In other words, a roof that collapses because of heavy snow would meet the definition of a casualty; slow, gradual water seepage in a basement would not.

Determine the Loss Amount

Here's where it can get complicated. You have to know the Fair Market Value of your property before and immediately after the casualty (what a willing buyer would pay for it) as well as the Adjusted Cost Basis (property cost plus capital improvements, minus depreciation and other factors). Take whichever amount is lower, subtract insurance or other reimbursements received or expected to be received. Then subtract another $100 for each casualty that occurred during the year (the $100 rule, per IRS) and reduce the loss again by 10% of your adjusted gross income.

File Form 4684

Report the loss on Form 4684 (You can download this from irs.gov), and take it as an itemized deduction on your Schedule A. The IRS tells me that you do not have to provide any additional documentation -- such as photos or videos of the storm-induced damage -- but that you should always have this information filed away for backup purposes.

Take the Loss in the Year the Casualty Occurred

Casualty losses are deductible in the year in which they occurred -- unless the loss happens in a federally declared disaster area. In which case, you can elect to take the loss in the preceding year, submitting an amended return if you've already filed.

Search Homes for Sale
See photos of homes for sale in your area and across the country on AOL Real Estate

Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

TurboTax Articles

What is Form 1095-C: Employer-Provided Health Insurance Offer and Coverage

The Affordable Care Act, or Obamacare, requires certain employers to offer health insurance coverage to full-time employees and their dependents. Further, those employers must send an annual statement to all employees eligible for coverage describing the insurance available to them. The Internal Revenue Service (IRS) created Form 1095-C to serve as that statement.

What is IRS Form 8379: Injured Spouse Allocation

The Internal Revenue Service (IRS) has the power to seize income tax refunds when a taxpayer owes certain debts, such as unpaid taxes or overdue child support. Sometimes, a married couple's joint tax refund will be seized because of a debt for which only one spouse is responsible. When that happens, the other spouse is said to be "injured" and can file Form 8379 to get at least some of the refund.

What are 1095 Tax Forms for Health Care?

The Affordable Health Care Act, also known as Obamacare, introduced three new tax forms relevant to individuals, employers and health insurance providers. They are forms 1095-A, 1095-B and 1095-C. These forms help determine if you need to comply with the new shared responsibility payment, the fee you might have to pay if you don't have health insurance. For individuals who bought insurance through the health care marketplace, this information will help to determine whether you are able to receive an additional premium tax credit or have to pay some back.

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
cxw2012neusoft@163.com

aaaaaaaaaaaaaaaaaaaaaaaaaaaa

May 22 2012 at 1:35 AM Report abuse rate up rate down Reply