Tax Relief for Flood Victims

As you are probably aware by now, President Obama declared several Tennessee counties (Cheatham, Davidson, Dyer, Hickman, McNairy, Montgomery,Perry,Shelby, Tipton and Williamson) as disaster areas.

The IRS issued the following press release yesterday highlighting some of the tax benefits associated with the disaster area designation. A provision of particular note for those of you who were impacted directly by the flooding, or with friends and/or family who were impacted by the flooding, is the opportunity to claim disaster losses incurred in 2010 on an amended 2009 tax return. Since most storm victims didn’t carry flood insurance, the opportunity to claim their losses on an amended 2009 tax return is one of the few ways they can recoup their uninsured financial losses. Congress is in the process of crafting legislation that would extend several tax benefits that expired at the end of 2009 including the favorable casualty loss provisions.

Congressional leaders made comments yesterday that they hope to pass this legislation before the Memorial Day break so it’s possible that the more favorable casualty loss provisions that expired at the end of 2009 will be extended into 2010.