Natural disasters can result in personal injuries and property damage. In Texas, especially along the Gulf Coast, residents and businesses occasionally suffer losses from natural disasters like hurricanes and tropical storms, yet they can also suffer losses from other disasters. Taxpayers who suffer a disaster can claim a disaster loss if they live in an area designated a federal disaster area by the president.
What is a disaster loss?
A disaster loss is similar to a casualty loss in that taxpayers can take a deduction on their income taxes. However, a disaster loss may provide you with a more favorable position on your income taxes. Among the types of natural phenomenon that also qualify for a disaster loss are forest fires, floods, tornadoes and earthquakes. If you suffer one of these incidents you can deduct the losses related to your home, household items and vehicles, but you cannot deduct losses paid for by your insurance.
Claiming a disaster loss may be tricky for some taxpayers. You can either claim it in the year that the disaster occurred or you can claim it for the previous year. Many victims like to do that as it provides them with an instant refund that they can use to pay for their losses.
Navigating your post-disaster world
Victims of natural disasters have a lot on their plates in the aftermath. Sometimes, it may seem like the disaster is never ending, especially when filing for insurance claims and other tasks like rebuilding your home and life.
Insurance companies can become particularly stubborn after natural disasters by trying to find loopholes in your policy or being slow to pay when you need funds. Make sure that you know your rights and purse the claim money you deserve.