There is no accounting for the toll of lives lost in a disaster - no matter how you figure it; with any loss, the costs are enormous. This year, there have already been 79 Major Disasters Declarations listed by FEMA, compared to 79 for all of 2015. Right now, parts of the country are still reeling from the effects of severe storms, flooding, wind damage and tornadoes and now Hurricane Matthew. Though many things cannot be repaired or replaced, with some planning, organizing, and preparing, you can get your tax documents and other financial records in the best shape to help you recover after a disaster.
The quickest and most effective response to a natural disaster is a local one - that is, local agencies and communities coming to the aid of victims happens in the crucial first moments; federal aid comes AFTER a disaster. That first response is what makes the most difference in many cases. Same holds true for your records. Once everyone is safe, your first steps can help protect what is recoverable and establish a paper trail to replace what is not.
Start your plan now. Where will you store important records and copies of critical documents? Organize all the paperwork. Health records, business records, insurance policies, and copies of tax returns should be backed up so you have a safe and secure copy. If you have all your records in order it will be easier to gain access to the programs designed to help victims of disaster including the casualty loss tax deduction, which can put more money in your pocket when you need it most.
You can deduct your casualty losses on the original return for the year of the loss, or on an amended return filed for the previous tax year when the President declares a Federal Disaster Area. For example, victims of the flooding in the Houston Texas area can either wait until they file their 2016 tax return next year, or they can claim their loss on their 2015 tax return now.
From severe flooding in Texas and Louisiana to Tropical Storm Hermine, and now Matthew, the one thing we know for sure that being prepared is one of the critical steps in recovery. Obviously, taxes and paperwork is not the thing to think about before, during, or even immediately after a disaster; but when the time comes, they must be done. The better job you do of getting the right forms filed, submitting the claims, and using the vast programs to help you get back to normal, the quicker life will get better.
Once the disaster is over, get your information together: take pictures of your damage, submit your insurance claim, and go to fema.gov for quick links to the various resources available to you. Then, reach out to a local Tax Pro to help you navigate the murky waters of disaster deductions. They can help you focus on your tax situation and help you get all the aid and reimbursement you are due. It is your money; you have earned it so keep more of it.