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5 Ways the IRS Can Help You If You Live in a Disaster Area


5 Ways the IRS Can Help You If You Live in a Disaster Area

by jscalona

Have you been affected by a natural disaster? Then you may need help from the IRS this tax season. Luckily, they have certain programs in place to help you out! Here are five ways the IRS can help after you've experienced a natural disaster:

1. Deduct Cleanup Expenses
During a disaster there’s obviously going to be a lot of cleanup. Did you know you can deduct a lot of these costs on your taxes? This can be anything from removal of debris, to demolition of wounded structures, or any number of repairs. Control and cleanup of hazardous substances also counts as cleanup as far as the IRS is concerned.

2. Net Operating Losses
If you experienced net losses with your business due to a disaster in your town, then you can carry back a qualified disaster loss five years. The loss must be the lesser of the taxpayer’s net operating loss for the taxable year, or the sum of the following:

  • Taxpayer losses allowable under Section 165 of the IRS code
  • Taxpayer’s deduction for taxable year for qualified disaster expenses allowable under section 198a of IRS code

3. Waiver of Certain Mortgage Revenue Bond Requirements
Again if your business or home received damage in the disaster, then you can get further help. There is a waiver that allows for certain mortgage revenue bond requirements otherwise applicable when a taxpayer’s home or business was destroyed or damaged. There are special provisions if the building is deemed unsafe or unlivable.

4. Special Depreciation Allowance
Section 710 of the National Disaster Relief Act provides 50% depreciation allowance for purchases of disaster assistance property. This is especially helpful when a taxpayer wants to provide further assistance to their friends and neighbors in the region. This 50% deduction is on top of the regular depreciation allowance that’s normally available.

5. Losses Attributable
Section 706 of the NDRA provides general relief to taxpayers who had damage done to their personal use property. The newest provisions of this law allow these taxpayers to claim all the destruction on their taxes, even if they don’t itemize their deductions!