Disasters involve tax decisions
Tax Tip of the Week
November 7, 2016
Disasters involve tax decisions
As you begin the process of recovering from a natural disaster, you'll eventually have some tax decisions to make. One of them includes when to claim the deduction for the loss on your federal income tax return. Under new rules, you may have a bit more time to make the choice.
Generally, you can choose to claim the loss on your current year return, or you can amend your prior year return to get a faster refund. For example, say you suffered damages from one of the floods that occurred in the U.S. during 2016. You could wait until you file your federal income tax return for 2016 to claim the loss. Alternatively, you could amend your 2015 return.
In the past, you had to choose which option to take by the due date of your return, typically April 15. Under the new rules, which are effective in October 2016, you have until six months after the due date for filing the tax return for the year the disaster occurred to decide if you want to take the loss in the earlier year.
Whichever method you decide to use to report the loss, you have the option to change your mind, as long as you do so within 90 days after the due date for making the original election. You'll have to fix the return on which you chose to take the loss originally, and attach a statement that says you're now revoking your prior decision. Remember, you can only take the loss once, so you'll have to amend the return first, then file a new one for the proper year.
Contact us for details about reporting losses. We're here to help you get your tax and financial life back in order after a natural disaster.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax 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.
© MC 2016
November 7, 2016
Disasters involve tax decisions
As you begin the process of recovering from a natural disaster, you'll eventually have some tax decisions to make. One of them includes when to claim the deduction for the loss on your federal income tax return. Under new rules, you may have a bit more time to make the choice.
Generally, you can choose to claim the loss on your current year return, or you can amend your prior year return to get a faster refund. For example, say you suffered damages from one of the floods that occurred in the U.S. during 2016. You could wait until you file your federal income tax return for 2016 to claim the loss. Alternatively, you could amend your 2015 return.
In the past, you had to choose which option to take by the due date of your return, typically April 15. Under the new rules, which are effective in October 2016, you have until six months after the due date for filing the tax return for the year the disaster occurred to decide if you want to take the loss in the earlier year.
Whichever method you decide to use to report the loss, you have the option to change your mind, as long as you do so within 90 days after the due date for making the original election. You'll have to fix the return on which you chose to take the loss originally, and attach a statement that says you're now revoking your prior decision. Remember, you can only take the loss once, so you'll have to amend the return first, then file a new one for the proper year.
Contact us for details about reporting losses. We're here to help you get your tax and financial life back in order after a natural disaster.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax 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.
