XIII. TAXCONSEQUENCES OF A DISASTER Federal Income Tax Filing Deadlines
Filing deadlines may be extended for individuals who have suffered losses due to
a disaster and/or for individuals in a federally declared disaster area. Check this website to see if extensions are being offered and to whom extensions are being offered:
http://www.irs.gov/uac/Tax-Relief-in-Disaster-Situations.
The Casualty Loss Deduction Individuals who have suffered losses due to a disaster may deduct casualty losses
relating to their home, household items, and vehicles on their federal income tax return. Losses covered by insurance are not deductible unless the tax filer submitted a timely claim for reimbursement from insurance but insurance did not cover the full extent of the loss (the loss must be reduced by the amount of any reimbursement.
Casualty losses are generally deductible in the year the casualty occurred.
However, if the tax filer has a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (i.e., FEMA’s Individuals and Households Program or FEMA Public Assistance), the filer can choose to treat the loss as having occurred in the year immediately preceding the tax year in which the disaster happened. If the tax filer does not have access to all information needed to file a casualty loss deduction, she may opt to amend her tax return later.
Assistance for Tax Filers Tax filing for individuals who have incurred extensive losses can be extremely
complicated. The Vermont Society of Certified Public Accountants (
http://www.vtcpa.org/) has developed detailed manual for tax preparers assisting disaster victims. The association may offer free or low cost tax assistance to disaster victims. Refer to the VBA website or the VTCPA website for more information.
Property Taxes Property Tax Abatements
Property tax abatements, in whole or in part, can be a good remedy for clients who have properties that were lost or significantly destroyed in a disaster. This can apply to both homeowners of stick structures and mobile homes. All towns are bound by Vermont statute for abatements but every town in Vermont has some unique ways of handling tax abatement hearings. The abatement statute is 24 V.S.A. § 1535 is below and provides (bolded sections are particularly relevant to clients post-disaster):
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