Can You Declare Storm Damage on Your Tax Return?

12/23/2019 (Permalink)

Storm Damage poses business owners in Chicago, IL, several major hurdles. First of all, it can shut down the institution, creating a loss of revenue and turning customers to another location. Secondly, costs of repairs can escalate rather quickly, especially if you need a water restoration company's services. You may wonder whether the government offers assistance in these cases, giving stores a helping hand. Yes, it's possible at times to file remediation costs on your annual tax return. This does have some rules though. Here are a few tips to consider.

What Types of Situations Are Covered?

Is your situation tax deductible? Not all insurance claims fall under federal mandates. According to recent guidelines, your business could declare losses if FEMA has labeled it as a national disaster. That means any of the following weather systems might be included:

• Floods
  
• Hurricanes
  
• Earthquakes
  
• Blizzards
  
• Tornadoes
  
  

When you file, you'll need the information for the disaster claim, including FEMA's assigned number for the storm. Losses from deterioration and lack of care are not permissible.

Are There Any Other Requirements?

Storm Damage met from any of the above must be first processed through an insurance claim. If it isn't, the government does not grant a tax break. Therefore, before you see an accountant about your receipts, make sure you've spoken with your insurance agency. Once that is done, save your documentation. You can submit the total casualty loss that exceeded the insurance payment. While personal losses require a deductible, business owners are given more leniency.

Do You Need To Wait?

Having a tax deductible is usually beneficial; however, can the shop afford to wait? In addition, new rules allow for proprietors to place the loss on the previous year's return or the current year. This could help offset costs, giving the establishment cash to reopen the doors sooner. This is a choice, so you'll have to weigh what works best for you. If you want to apply it to last year, you'll need to file for an amendment or reconsideration.
The government offers those affected by Storm Damage some assistance. First file with insurance. Then, claim anything that was not covered.