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 | Did You Have Substantial Property Damage in 2004?
You May Be Able to Deduct a Portion of Uninsured Losses from Your TaxesDocument Unreimbursed Losses -- Including Deductible Amounts -- I.I.I. Suggests
INSURANCE INFORMATION INSTITUTE
Contact: Press Offices
New York: 212-346-5500; media@iii.org
Wash. D.C.: 202-833-1580
www.iii.org
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)
Contact: Robert Becton
New York: 212-596-6228; rbecton@aicpa.org
www.aicpa.org
COLCOMGROUP (FOR AICPA)
Contact: David Colgren
New York: 646-536-5103; dcolgren@colcomgroup.com
NEW YORK, March 28, 2005 – With less than two weeks left until tax day, taxpayers are sifting through their files to assess last year's gains and losses. If you suffered a loss of personal property not entirely covered by insurance, a portion of the unreimbursed loss may be an allowable deduction on your federal income tax return, according to the Insurance Information Institute (I.I.I.).
“If your home, car or boat was damaged or destroyed by a windstorm, fire, flood, vandalism or other sudden and unexpected disaster, you may be able to deduct a portion of the loss from your taxes,” says Jeanne M. Salvatore, I.I.I.'s vice president - consumer affairs.
To qualify for the deduction, these casualty losses usually need to be substantial, says the I.I.I. If you were significantly underinsured or had a large catastrophe deductible, you may have a sizable unreimbursed casualty loss. Florida residents, for instance, whose homes were damaged by one or more of the catastrophic hurricanes last year, may qualify for this deduction because of the percentage deductibles that were triggered.
“Generally, you can deduct the [casualty] loss to the extent it exceeds 10 percent of your adjusted gross income, less one hundred dollars," says Ted Sarenski, CPA/Personal Financial Specialist, partner with DBB Financial Services and member of the American Institute of Certified Public Accountants’ (AICPA) personal financial planning executive committee.
"If the property is used in a trade or business, slightly different rules apply, so it is important to ask your tax preparer for assistance,” Sarenski notes.
“Collect all receipts, insurance statements, police reports (if appropriate) and other documentation and present it to your tax preparer to see if you qualify,” says Salvatore.
According to the AICPA, catastrophic medical expenses exceeding 7.5% of your adjusted gross income may also qualify for a deduction.
Those who prepare their own tax returns should review the "Nonbusiness Casualty and Theft Losses" and Publication 502 on Medical and Dental Expenses for 2004, available on the Internal Revenue Service website www.irs.gov. They can also contact their state income tax bureau to learn more about both the federal and state guidelines for this deduction.
Insurance information can be accessed at the I.I.I.'s website www.iii.org. I.I.I.’s website also has free, downloadable software to create a home inventory. This can help consumers keep track of the value of their personal possessions when filing claims and can substantiate losses if they suffered an unreimbursed insurance loss.
The AICPA, AICPA Foundation, the American Red Cross and the National Endowment for Financial Education (NEFE) have written and produced two guides to help consumers from a personal financial perspective. Disaster and Financial Planning: A Guide for Preparedness and Disaster Recovery and A Guide to Financial Issues to help people regain financial balance following a disaster. Both guides contain important tax information and are being distributed by participating local chapters of the American Red Cross throughout the U.S. The guides can also be accessed via the Internet at www.redcross.org.
The Insurance Information Institute is a non-profit, communications organization supported by the property/casualty insurance business.
The American Institute of Certified Public Accountants is the ISO 9001-2000 certified national professional organization of CPAs, with approximately 350,000 members, including members serving in business and industry, public practice, government, and education; student affiliates; and international associates. It sets ethical standards for the profession and U.S. private auditing standards. It also develops and grades the Uniform CPA Examination. For more information about the AICPA, please visit www.aicpa.org. |
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