Planning for Natural Disasters
It is that time of the year when we become all too familiar with brewing storms and hurricane tracking models. Let us hope that we are once again spared from a hurricane this season. Although hurricanes provide us with the ability to plan, there are other disasters which can occur without much warning. There are several things you can do to protect your financial safety in the event of a disaster.
Update emergency plans
Even though you may have prepared for a disaster last year, personal and business circumstances change over time. Hence, emergency plans should be reviewed annually to make sure the changed circumstances are provided for.
Keep Documents in a Safe Place
Documents such as tax returns, insurance policies, bank statements and other important papers should be kept in a safe place. Since most, if not all, of these documents are now available electronically it is very easy to safeguard them. In the event you have older documents that are only available on paper, now is the time to scan them and save them electronically.
It is never a bad idea to take pictures or videos of your home, its contents and other valuables. Doing so makes it much easier to claim insurance benefits in the event of a disaster. The IRS actually has a workbook to assist you in cataloguing the contents of your home. Follow this link to access the workbook: https://www.irs.gov/pub/irs-pdf/p584.pdf
Should you suffer a casualty loss be aware that the 2017 Tax Act modified the casualty loss deduction for taxpayers. Losses from casualties will only be deductible if attributable to a federally declared disaster. In order to claim a deduction you must include the FEMA code assigned to the disaster.
Taxpayers who are affected by a federally declared disaster can contact the IRS at 1-866-562-5227. IRS personnel trained to handle disaster related issues can answer taxpayer questions. The IRS can also provide taxpayers copies of filed tax returns.