photo by patch.com
We all know how devastating the severe storms and flooding that began on August 11, 2014 were for residents in Oakland, Wayne and Macomb County. Thousands of families lost valuable possessions and memories due to the flood and many, many people did not have sufficient funds nor insurance coverage to cover their losses.
The President of the United States declared the counties of Oakland, Wayne and Macomb to be federal disaster areas. Individuals who resided in those counties or have a business in those counties may qualify for tax relief.
The declaration as a disaster area permits the Internal Revenue Service to postpone deadlines for taxpayers who either reside or have a business in the disaster area. Certain deadlines such as deadlines to file corporate tax returns by September 15, 2014 were extended to January 15, 2015 and individuals who had tax returns extended to October 15, 2014 could further extend filing their tax returns to January 15, 2015. In addition, estimated tax payments for the third quarter of 2014, which normally would have been due September 15, 2014 could be extended to January 15, 2015.
The IRS is supposed to automatically apply and abate penalties for individuals living in the affected counties; however, in the event an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the number on the notice and request an abatement of interest, late filing and late payment penalties that would otherwise apply.
Deductibility of casualty losses. Because our three counties are now a federally declared disaster area, taxpayers in these areas can claim disaster related casualty losses on their federal income tax return in the year of loss. Individuals may deduct their personal property losses that are not covered by insurance or otherwise reimbursed to them by filing IRS Form 4684 along with their individual Form 1040.
Many people are unaware that they may deduct their unreimbursed casualty losses and this deduction can reduce a person’s tax bill or increase a future refund.
By Jeffrey D. Moss, Member, Dawda, Mann, Mulcahy & Sadler PLC
