Mother Nature reminds us all the time of her power to inflict damage. Hurricanes. Tornadoes. Blizzards. Wildfires. Earthquakes. The list goes on and on.
While these extreme hazards get lots of attention, more of us end up each year dealing with other less dramatic, but still unfortunate incidents. These include such things as home burglaries, auto accidents or even vandalism to property.
Regardless of whether your damages are from natural causes or man-made, the tax code might be able to offer some relief via a casualty loss claim.
The Internal Revenue Service defines a casualty as the damage, destruction or loss of property resulting from a sudden, unexpected or unusual event. If the loss you suffer meets the guidelines, you can claim your casualty damage losses as itemized deductions.
This year, the IRS has added a new claim to the list: damages caused by Chinese drywall.
Several years ago, homeowners started complaining of suffering from irritated and itchy eyes and skin, labored breathing, bloody noses and headaches when they were in their houses. They eventually traced the cause to Chinese-made drywall.
The construction product reportedly emits sulphur fumes that, in addition to making homes smell bad, corrode pipes and electrical equipment, as well as damage air conditioners and other appliances.
The U.S. Consumer Product Safety Commission has received complaints from homeowners in 42 states, the District of Columbia, American Samoa and Puerto Rico who believe their health symptoms and property damages are related to the problem drywall. State and local authorities have also received similar reports.
Almost as soon as the drywall issues surfaced, homeowners began looking for help in making the often extensive, and costly, repairs to their homes. Several members of Congress became their advocates and requested the IRS allow these homeowners to claim the losses as casualty deductions.
Although the damage was not, as the tax code requires, sudden, the lawmakers argued that it certainly met the other criteria of being unexpected and an unusual identifiable event.
The IRS was persuaded.
Affected homeowners now can deduct their Chinese drywall-related losses. Specifically, the IRS is allowing as claims the amounts paid to repair the homes and affected home appliances and equipment.
Since this is an ongoing issue and some homeowners already have paid for all or most of their repairs, the IRS has issued detailed guidance and safe harbor timetables for the claims.
Other overlooked deductions: The Chinese drywall claim is definitely one that some homeowners might miss this filing season.
But there are other deductions that affect many more taxpayers and are overlooked every tax-filing season.
To ensure that you claim every deduction you can, join Bankrate tax advisor George Saenz and me on Tuesday, Feb. 22, at 2 p.m. Eastern time for a live online chat about overlooked deductions.