Is Storm Damage Tax Deductible?

10/26/2019 (Permalink)

Flood damage in Arlington Heights, IL

If your commercial property or business has suffered a loss from natural (and some man-made) disasters in Arlington Heights, IL, your actual financial loss may be tax deductible. The rules will vary based on the circumstances, but if you are armed with the right information, you can save your company a bunch of tax money at a time when it most needs it.

What Counts As Storm Damage?

If your loss was from a disaster, the IRS allows what’s called a casualty loss deduction. A casualty in federal tax law is a “sudden, unexpected, or unusual loss or damage to some property” that’s owned by your business. Additionally, the damage must be from a verifiable event, including

• Earthquakes
  
• Flood damage
  
• Hurricanes and severe storms
  
• Lightning
  
• Riots
  
• Tornadoes
  
• Volcanic eruptions
  
  
  

There are identifiable causes of casualty losses that won’t qualify, such as accidents, termite damage, deterioration and normal wear-and-tear. Typically, the rules covering storm damage loss are more liberal for businesses than for individuals. Also, the losses can usually be written off by businesses even if they don’t itemize.

What Are Federal Disaster Declarations?

When the federal government declares a disaster, both tax write-offs and financial assistance usually becomes much more generous. For instance, while most losses are recorded in the present tax year, a presidential disaster declaration means you can write it off retroactively, putting relief funds into your hands far more quickly. State governors can also declare disasters, although this won’t impact federal relief.

How Is the Write-Off Applied?

A few IRS publications might be used to address your storm damage losses. Publication 547 is usually key to understanding how you can write off the damage and discusses casualties, disasters and thefts, while Form 4684 is used to file for relief. However, if the losses could be covered by insurance, the IRS will disallow your write-off.
Once you’ve experienced a loss from a disaster in Arlington Heights, IL, call a professional storm cleanup company for immediate mitigation of further damage. When the situation has been stabilized, they’ll begin the process of cleanup and restoration so you can return to normal operations and put it all behind you.