BAY COUNTY, Fla. (WJHG/WECP) - When Hurricane Michael blew through the area, the damage caused people to blow through cash.
Now with tax season approaching, the Disaster Relief Tax Act can help you keep more money in your pocket. (WJHG/WECP)
Now with tax season approaching, the Disaster Tax Relief Act can help you keep more money in your pocket.
"It lowers your taxable income, so your federal tax will be lower," said Pam Evans, the manager at Liberty Tax Service.
Reimbursement from FEMA funds or losses paid with insurance money cannot be claimed.
"Documenting is critical, documenting your losses, especially if you did not have insurance," said Evans.
It could be as simple as losing your electricity and your food goes bad.
"It's time consuming but it's worth it," said Evans. "Because what happens with your losses, it actually goes to your standard deduction."
The Internal Revenue Service's website clarifies what you can claim, what to do, and how to do it in a disaster situation through Publication 547.
"That's an awesome publication by the IRS," exclaimed Evans.
Then to process your claim, you use Form 4684.
This paperwork covers most casualties, disasters and losses.
"There's nothing specific to Michael except a couple of things, like accessing your 401K," said Evans.
Those with a retirement plan will not be penalized for accessing their 401Ks to pay for Hurricane Michael losses.
The main goal of the Disaster Tax Relief Act is reducing your federal tax burden.
To find links to the documents mentioned, click here.
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