Tax Relief for Natural Disasters: What You Need to Know

Tax Relief for Natural Disasters

The number of natural disasters striking has been increasing each year. In particular, there has been a rise in hurricanes, floods, typhoons, and tsunamis believed to be due to a combination of natural forces (like El Nino) and climate change.

While the number of deaths from natural disasters is decreasing thanks to better preparedness, the bad news is that natural disasters still affect about 160 million people a year.

The Financial Costs of Natural Disasters

Earthquakes, wildfires, tsunamis, tornadoes, hurricanes, and floods are not just going to make your life inconvenient for a while. They will turn your life upside down and hit your financial savings so hard that you may have to start from scratch all over again. In 2018, a federal report found that this resulted in $91 billion worth of damage in the United States alone.

Many people find that surviving a natural disaster is easy compared to having to deal with insurance companies. There is often a large amount of paperwork and time that must pass before receiving compensation for losses.

You may believe that your homeowner’s insurance will cover any damage to your house and the contents in it, but this is not always the case.  In fact, homeowner’s insurance generally does not cover floods, earthquakes, mudslides, landslides, and sinkholes. A bit of bad luck and you could be financially ruined for the rest of your life.

Tax Relief for Natural Disasters

One financial benefit that people often initially overlook in the face of natural disasters is eligibility for tax relief. While a personal loan can help you get immediate funds, tax relief opportunities can also benefit you. IRS tax relief is a real thing and could help you get back on your feet again. According to the IRS’s own policy, if you or your business are located in a federally designated disaster area, you are considered an affected taxpayer and can receive certain special benefits. Let’s explore the types of tax relief available to those who have gone through a natural disaster.

1. Access Your Retirement Accounts Without Penalty

Most of us probably have some sort of retirement account, either a 401k or IRA, for when we finally reach our golden years. However, we all know that if we touch the money early in these accounts before we reach a certain age, we are subjected to penalties such as the 10 percent early withdrawal penalty inflicted on us by the IRS.

If you have survived a natural disaster, however, you can take advantage of free access to your retirement accounts, helping you with your current financial needs without facing any type of penalty. There are certain limitations involved in this, so you should be certain to contact reputable tax relief companies first.

2. Save Money with Casualty Deductions Tax Relief

When filing your taxes, it is always a great idea to look for as many deductions as possible. If your home has been damaged due to a natural disaster and insurance is not covering all of it, you can deduct the amount that you are covering out of pocket on your taxes. Keep in mind that the insurance company must have turned down your claim. In other words, just paying for things yourself without filing a claim first will not count as a casualty deduction. Be sure to keep all of the paperwork from the insurance company and every receipt for everything you had fixed on your own. The IRS is not known for blindly trusting anyone and they will want to examine everything you have.

If all of this sounds complicated and overwhelming, consider using a tax relief company such as Anthem Tax Services. They will provide you numerous tax resolution services, including preparing your taxes for you and making sure you get as many deductions as possible. They start by giving you a free tax consultation. This is the perfect time to ask any questions that you may