Taxes Blog

Finance Blogs » Taxes » Tax help for storm damages

Tax help for storm damages

By Kay Bell · Bankrate.com
Wednesday, February 2, 2011
Posted: 2 pm ET

I don't know about you, but I am sooooo ready for winter to be over. Last night, thermometers in Austin dropped to 14 degrees, with the wind chill index near zero.

Of course, I realize that other places are having it much worse. If you are in one of those areas that's getting blasted by snow and ice and winds that seem to cut right through you and your drafty house (more on your residence in a minute), ask the Internal Revenue Service for some help.

No, an IRS agent won't come shovel out your snow-covered car. But if you sustain some damages due to this wintry blast, you might be able to claim it as a casualty loss deduction on your tax return.

A casualty as is defined by the IRS is the damage, destruction or loss of property resulting from a sudden, unexpected or unusual event. Storms, such as tornados, hurricanes and even winter blizzards, count.

As with almost everything in life, the timing is crucial. Any damages you incur from this winter storm will count as losses on your 2011 tax return you file next year.

But if your region is particularly hard-hit and the president ultimately declares it a federal disaster area, then you can claim your losses on your 2010 taxes. So far this year there haven't been any presidentially declared disasters, but keep an eye on FEMA.gov, the website for the Federal Emergency Management Agency.  Disaster declarations are posted there, and this massive winter storm just might prompt the first such announcements of 2011.

Now about your drafty house. When the cold front blew into Austin on Monday night, it felt like we didn't even have a front door. The wind was coming through so much that I resorted to taping around the entry with blue painter's tape. Yes, it's not that effective, but it stopped things from blowing around our entryway.

If you have doors or windows that are just as drafty, you might be able to get some tax help in replacing them. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act that became law back in December includes a tax credit for some home energy improvements.

This latest version of the home energy efficiency tax credit isn't as generous as the one created under the stimulus bill. That tax credit for 2009 and 2010 was $1,500.

For 2011, the maximum credit now is $500 and there are various rules and different dollar amounts for eligible improvements. And if you used the better energy tax credit up in 2009 and 2010, you can't claim this new one now.

But if you have some tax credit claim leeway and discovered, as we did, that you need to do some work on the house, a relatively small tax credit is definitely better than no tax credit.

So keep track of all your home improvements and/or repairs from any storm damage. That documentation will help you get the most tax relief possible. And stay warm!

Make sure you get all the latest tax news and tips this filing season by subscribing to Bankrate's free Daily Tax Tip newsletter.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.