With the passage of the Tax Cuts and Jobs Act in December, 2017, Congress made a significant change to the casualty loss rule for the 2017 tax filing year. Her is what they did:
The original rule limited the amount of losses related to casualty losses (i.e. hurricane damage) to the amount over 10% of your income. Obviously, this was a big number so very few taxpayers received any benefit.
For 2017, if you incurred a casualty loss for federally declared disaster (i.e. Hurricane Irma which was a federally declared disaster in most if not all of Georgia, South Carolina and Florida) then the amount of the deduction is allowed for amounts over $500. The 10% limit does not apply for 2017.
In addition, the new law allows you to take this loss in addition to your standard deduction, so you do not need to itemize to receive a benefit.
If you incurred any losses over $500 related to hurricanes in 2017, then you will receive an additional deduction. Unfortunately, this loss does not apply to losses related to evacuation expenses.
Please contact us if you have any questions regarding this new law and it’s impact on your specific situation.