Hurricane Losses and the Tax Code

I just read the tax laws for taking a deduction for expenses from hurricane damage.  Here is a link if you are interested.

https://www.irs.gov/newsroom/top-10-tips-for-deducting-losses-from-a-disaster

A couple of comments: (1) you just can’t simply deduct the expense.  There are calculations described in several IRS Forms, Schedules, and Publications.  (2) It is a 10 step process which includes establishing the basis, adjusting for Fair Market Value, and on and on.  Generally, if your loss does not exceed 10 percent of your Adjusted Gross Income, you will not be able to claim the loss.

IRS ImageSo for those who have losses in the thousands from Hurricane Florence, they will probably be tapping IRA’s to cover the loss since most don’t have thousands sitting and available in bank accounts to cover disasters.  That would be a taxable event (withdrawal from IRA), more expense, NICE!

At the least, Congress and the IRS could forgive tax on IRA withdrawals to pay for losses from disasters.  Better yet, simplify the tax code so you could SIMPLY deduct the loss.

You and I probably won’t live to see that!!!

I would suggest that when a Congress Person uses the phrase, “in the best interest of my constituents”, It probably should be rephrased to, “in the best interest of my campaign donors and sponsors”.

***** S&E *****

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