Tips for Taxpayers Affected by Disasters

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The Internal Revenue Service has issued a Tax Tip for taxpayers who have experienced a loss of critical operational and financial records in a disaster.  Though most of our clients and contacts do not need to be concerned about an earthquake or hurricane, there is often an incident of regional flooding due to storms throughout the United States, landslides and, sadly, traumatic fires.  Oftentimes, damages attributable to these disasters include the loss of records including those that may be necessary for obtaining federal assistance, if applicable, and insurance settlements.

Tax Tip 2018-165 offers some tips to help taxpayers reconstruct or get copies of specific types of records after a disaster. Taxpayers can get free tax return transcripts by using the Get Transcript tool on IRS.gov, or order transcripts by phone at 800-908-9946.

Establishing Proof of loss

To establish the extent of the damage, taxpayers should document with photographs or videos of affected property as soon as possible after the disaster. Taxpayers can refer to their cell phone for pictures that show the property pre-disaster. If a taxpayer does not have access to photographs or videos of their property, they can sketch pictures of each room to help in remembering what property was affected.

Taxpayers can also support the valuation of property with canceled checks, receipts, or other evidence. If taxpayers purchased items using a credit card or debit card, they should gather physical past statements or retrieve them from online if available.

Taxpayers can contact the title company, escrow company, or bank that handled the purchase of their home to get copies of appropriate documents.

Taxpayers who made improvements to their home should contact the contractors who did the work to see if records of cost and scope of work are available. They can also obtain written accounts from friends and relatives who saw the house before and after any improvements.

For inherited property, taxpayers can refer to court records for probate values. If a trust or estate existed, the taxpayer can contact the attorney who handled the trust.

If no other records are available, taxpayers can contact the county assessor’s office for older records that might address the value of the property.

Other Property Records

Other resources like Kelley’s Blue Book, the National Automobile Dealers’ Association (NADA) and Edmunds.com are available online and are in most libraries to help determine current fair-market values of most cars.

The Internal Revenue Service has issued several publications to assist taxpayers in the event of a disaster including Publication 547, Casualties, Disasters, Thefts and Publication 584, Casualties, Disasters and Thefts Workbook and Publication 2194, Disaster Resource Guide for Individuals and Businesses.

Disasters carry a great deal of stress and hardship to its victims.  If recordkeeping matters, and loss of records, is among the damage suffered, please contact Bob Grossman or Don Johnston.