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Tax Tip of the Week
For the week of
January 20, 2003

Get tax relief when disaster strikes


Wildfires and floods in the summer, tornadoes in November, ice storms in December - 2002 was a typical year for disasters. If a natural disaster strikes your area, the only bright spot might be the opportunity for tax relief.

Get a quick tax refund for a Federal disaster loss. If you suffer a loss as a result of a disaster, you can claim the loss as an itemized deduction on your tax return for that year. But if the President declares your location a federal disaster area, there may be a quicker way to obtain a refund.

A special rule gives you the choice of amending the previous year's return and claiming the loss against that year's taxes. This can often give you a faster refund and provide cash to help you recover from the disaster. For example, if you suffer a disaster loss in January 2003, you can claim the loss on your 2002 return or wait until you file your 2003 return in 2004 to claim the loss.

Weigh your options carefully. The size of your loss deduction depends on your income in the year you claim the deduction, so it's not always clear which choice will give you the biggest deduction. You may have to weigh how badly you need the cash against the size of the deduction.

If you suffered a casualty loss recently, give us a call to discuss the best course of action in your situation. We are here to help.


Prior Tax TipsClick here to view previous tax tips.

"Tax Tips" are published weekly to provide useful tax information. Return to this site every week for helpful tax-cutting suggestions, tax reminders, and current tax information.

The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.

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