Monday, March 3, 2014

TOP 10 POST-DISASTER TAX TIPS



TOP 10 POST-DISASTER TAX TIPS


Here is list of 10 post-disaster tax tips that you should address as quickly as possible after you have made sure that people and pets are safe and that any damage mitigation has been accomplished.


 “World According to Garp” - “Pre-disastered Home” (http://www.youtube.com/watch?v=DBSAeqdcZAM)

1.                               Is your damaged property part of a Federally Declared Disaster? (Get FEMA details at: www.FEMA.gov/Disasters.) If yes, proceeds for “contents” losses related to a primary residence are not subject to any taxation, but must be taken into consideration when trying to determine if there is a deductible loss.
2.                               Photos – Post event: Take a lot of images, “wide” and “detail” shots, before and during any clean-up or debris removal. Take photos during any repairs process.
3.                               Photos – Pre-event. Gather any photos that were not destroyed in the loss event, of your real and personal property (contents). Contact friends and relatives who may have visited your property and taken photos. The photos may be of people, but the surrounding foreground, background, and periphery may show important details and contents.
4.                               Documentation – Gather all information related to the following:
Cost basis of real and personal property
Retain all material comes with or was used to claim insurance reimbursements by categories such as real property, contents, vehicles, additional living expenses.
5.                               Keep a detail record of all post-event expenses that are “new,” including debris removal, clean-up, and emergency and permanent repairs and replacements, new living expenses, insurance proceeds and other new post-event financial support. Possibly use a separate checking account to assist controlling these receipts and disbursements.
6.                               Most tax professionals do not have experience or in-depth knowledge related to tax reporting for these events. (They may never have a client experience such an event. “Why become knowledgeable?) The dollar amounts will be large, the need for expertise is important. If your tax professional does not have the experience, have the tax professional consult with someone who is knowledgeable.
7.                               If you believe the insurance proceeds will be less than the “cost basis” of your real property, consider securing appraisals of the property “just before” and “just after” the loss event.
8.                               Do not claim a loss before there is a “Closed Transaction.” That is until you have tied down the amount of the loss and you have received all the proceeds reimbursing you for your loss, including insurance, FEMA and other government sources, law suits, and potential Hazard Mitigation Buyouts.
9.                               File tax returns as usual; there is no special “filing holiday” or deferral for filing tax returns as a result of the loss you have experienced.
10.                           Business and investment property losses are subject to different rules that losses for personal use real estate.



JOHN TRAPANI assists both taxpayers directly and advises taxpayers’ tax professionals.

This material was contributed by John Trapani. A Certified Public Accountant who has assisted taxpayers since 1976, in analyzing and reporting transactions of the type covered in this material.  

© 2014, John Trapani, CPA,
All rights to reproduce or quote any part of the chapter in any other publication are reserved by the author. Republication rights limited by the publisher of the book in which this chapter appears also apply.


JOHN TRAPANI


Certified Public Accountant


2975 E. Hillcrest Drive, #403


Thousand Oaks, CA 91362


(805) 497-4411       E-mail John@TrapaniCPA.com




Blog: www.AccountantForDisasteRrecovery.com


                                                                                         
It All Adds Up For You





Internal Revenue Service Circular 230 Disclosure
This is a general discussion of tax law. The application of the law to specific facts may involve aspects that are not identical to the situations presented in this material. Relying on this material does not qualify as tax advice for purpose of mounting a defense of a tax position with the taxing authorities
The analysis of the tax consequences of any event is based on tax laws in effect at the time of the event.


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