Tips for Reconstructing Important Tax Records After a Disaster
Over the last few years, the U.S. has seen an unprecedented number of natural catastrophes, including wildfires and record-setting hurricanes. Many of those who were forced to suffer through these natural disasters continue to face ongoing challenges, including reconstructing their financial documentation and tax records. Obtaining this information is extremely important, as the paperwork is often essential for documenting tax-deductible losses, supporting tax transactions, or requesting federal assistance, so if your own records were recently lost as a result of an accident or catastrophe and you need to recover information about lost or destroyed property, whether business or personal, you should contact an experienced tax and IRS lawyer who can help you.
Personal Residences and Real Property
When it comes to personal residences and real estate, individuals whose property-related documentation was destroyed in a disaster, should consider taking a few steps, including:
- Contacting the title company, escrow company, or bank that handled the purchase of the home;
- Obtaining a current property tax assessment from the county assessor’s office;
- Contacting the mortgage company to obtain copies of appraisals and other documentation related to the cost or fair market value of the property;
- Requesting statements from contractors verifying the cost of improvements to the home;
- Contacting their insurer to obtain copies of their policies;
- Collecting paperwork from the institution that issued any home improvement loans; and
- Checking court records for the probate value of any inherited property.
Recovering this kind of documentation can make all the difference to the outcome of a request for a tax deduction or financial assistance.
Taxpayers who own businesses are required to provide the IRS with specific information about the value of those assets. This can be difficult when business records are destroyed during a disaster, so taxpayers who find themselves in this predicament are encouraged to:
- Create a list of lost inventories by obtaining copies of invoices from suppliers;
- Obtain copies of bank statements that reflect a company’s sales;
- Request copies of the prior year’s federal, state, and local tax returns, as well as sales tax reports, payroll tax returns, and business licenses;
- Request a copy of the original purchase agreement for the business from the real estate broker; and
- Obtain copies of invoices and receipts from any contractor who worked on the property.
If a business sustains damage or is destroyed as a result of an unexpected disaster, the owner could be eligible to claim a casualty loss deduction on his or her tax return. This does, however, require taxpayers to obtain copies of important documentation that may have been destroyed along with their business.
In most cases, casualty losses are only deductible in the year that they occurred and personal losses may not be deductible at all. If, however, someone’s property was damaged during a federally declared disaster, a taxpayer could instead choose to deduct that loss on his or her return for the previous year. These are not the only limits and restrictions that apply to personal and business casualty losses, so if you suffered a physical loss during a hurricane, wildfire, or other natural disaster, please reach out to our legal team for help.
Schedule a Free Case Review Today
To consult with an experienced Florida tax & IRS lawyer about the tax repercussions of a catastrophe that damaged your home or business, please contact Ronald Cutler, P.A. at 386-490-9949 today.