What does a federal disaster area have to do with my taxes?

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What does a federal disaster area have to do with my taxes?

When disaster hits an area, stories of mass destruction fill the news headlines, estimates of the total loss are in everyone’s conversations. Disaster relief efforts swarm the area, and the very last thing anyone is thinking about in the throes of recovery from a mega disaster, is what tax implications it will have on them.

As you might guess, the tax code is as thick as mud on the subject. There are numerous exemptions one can be awarded – if they meet the strict qualification guidelines. The most basic example for residents of an area that has been declared a federal disaster area is that they are able to exclude disaster relief payments from gross income.

We’ve found an interesting article that discusses many of the scenarios of disaster relief and tax code implications, including casualty losses, involuntary conversion, lost tax information, travel expenses for disaster victims and more. Read it in full here in the article, “Tax Implications of Natural Disasters” by Todd Pefferman.

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