With devastating hurricanes seemingly on the rise, advisors should be aware of tax strategies that can be used to help clients who suffer financial losses in such a catastrophe.

First, the IRS routinely eases filing deadlines after federally declared disasters. Victims of Irma and Harvey who were on extension to file their 2016 returns now have until Jan. 31 to file penalty-free. If they had 2017 quarterly estimates due Sept. 15, they’re also extended until January, says Martin Abo, CPA and managing member of Abo and Company in Mt. Laurel, N.J.

Have clients “keep good records of property purchases and improvements and store data in places that will not be affected by a disaster, such as in the cloud or fire safes,” says Scott Kadrlik, CPA at Meuwissen, Flygare, Kadrlik and Associates in Eden Prairie, Minn.

Clients also need electronic copies of key documents and photographic or video evidence of the contents of their homes, especially items of higher value, says James Lawrence, CPA and partner Traphagen & Traphagen in Oradell, N.J.

When records aren’t available due to a natural disaster and it’s not sufficient to recreate them, the IRS will consider requirements satisfied by the “best reasonably available information presented in good faith,” adds Gail Rosen, CPA with Wilkin & Guttenplan in Martinsville, N.J.

A casualty loss is normally reportable in the year the loss was incurred, according to Neil Becourtney, CPA and partner with CohnReznick’s Eatontown, N.J., office. Assuming the taxpayer’s total gross income is comparable for 2016 and 2017, for instance, reporting a Harvey or Irma casualty loss on an amended 2016 income tax return or on a 2016 Form 1040 not yet filed can mean your client receives a refund sooner than by waiting until filing a 2017 Form 1040 the following year.

“If 2016 gross income is significantly lower than 2017 income, a greater deduction will be obtained from claiming the deduction for 2016,” Becourtney notes.

To compute the deductible casualty loss, your client needs to determine the difference between the fair market value immediately before and immediately after the casualty, and the adjusted basis of the property (usually the cost of the property and improvements), according to Amy Strouse, CPA with Lancaster, Pa.-based RKL LLP and member of the Pennsylvania Institute of CPAs.

Sentimental value is irrelevant, and a competent, professional appraisal can be key, Kadrlik adds.

“Suppose Michael and Maria have [adjusted gross income] of $1.25 million,” Strouse says. “They experience flood damage to their primary residence of $50,000. They did not have flood insurance and received no insurance reimbursement. None of the casualty loss is deductible because the loss reduced by $100 ($49,900) did not exceed 10 percent of their AGI ($125,000). Their casualty loss would need to exceed $125,100 before the first dollar of loss would be deductible.”

The higher your client’s marginal tax rate, the more valuable the deduction. A $4,000 deduction saves $1,120 for a taxpayer in the 28 percent tax bracket, for instance, but is worth $1,320 to a taxpayer in the 33 percent bracket.

“If you file a claim for reimbursement from insurance or otherwise for which there’s a reasonable prospect of recovery, no portion of the loss is deductible until the claim is resolved,” Rosen adds.

No gain is recognized on receipt of insurance proceeds for personal property contents that are not scheduled property for insurance purposes, Lawrence adds. “This allows taxpayers to replace their home and contents with items of their choosing, not restricting them to replacing artwork with similar artwork, or dining room furniture with similar furniture,” he says.

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