According to FEMA, the federal government has declared 49 Major Disasters during the first six months of 2010. People impacted include residents of specific counties within the following states:

Alabama, Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, Iowa, Massachusetts, Mississippi, Kansas, Kentucky, Maine, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Virginia, West Virginia,

Have you suffered a loss while living or owning a business within a Federally Declared Disaster Area? If so, you might be in a position to quickly get back some money from the IRS in connection with the loss you suffered.

According toIRS Publication 547, Casualties, Disasters, and Thefts, you are allowed to claim a deduction for certain types of losses. When dealing with non-business property, however, these losses are generally limited to the extent the loss incurred exceeds 10% of your income. So if you earn $100k, the first $10k of your loss doesn’t save you any taxes.

When your loss is within a Disaster Area, the rules become a lot more liberal. For starters, the 10% threshold does not apply to Disaster Area losses, making 100% of your loss fully allowable.

Plus, you can elect to claim the loss on the tax return filed for the year of loss, or you can deduct the loss as part of the original return or an amended return for the prior tax year. For 2010 Disaster Area losses, therefore, affected taxpayers can either amend their 2009 returns to claim the loss or can hold off claiming the loss until they file their 2010 returns. People who amend their 2009 returns should see their tax refund within 90 days of filing the paperwork.

To report your loss, complete and attach aForm 4684, Casualties and Thefts, to your federal income tax return. Plenty of good information about claiming these types of losses is available as part ofthe instructions to Form 4684.

 

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