Liberty Tax Service will offer free amended tax returns for people who have suffered casualty losses in the New Jersey, New York and Connecticut counties that have been designated as Federal disaster areas due to Hurricane Sandy.
Special tax circumstances apply to areas that the President has declared federal disaster areas. “Determining your casualty losses can be a confusing process, and our goal is to help those who are in need during a very traumatic time,” said Andrew Santamaria, a Verona resident who owns the Liberty Tax Service at 295 Bloomfield Avenue in Montclair.
Taxpayers must claim a casualty loss in the year in which they suffered the loss unless they are in an area determined by the President to warrant federal disaster assistance. In this case, taxpayers have a choice of deducting their casualty loss on the current year return, or deducting the loss on the prior year return. This can be done by filing Form 1040X, “Amended U.S. Individual Income Tax Return”.
Casualty and theft losses for personal property can be claimed as the result of destruction from unanticipated weather events such as hurricanes, tornadoes, floods, etc, by filing Form 4684, “Casualties and Thefts”, Section A. Taxpayers who have incurred property losses should file insurance claims promptly. If the property is not completely destroyed, determine the loss by figuring the decrease in fair market value minus any insurance reimbursements.
Rental property, which is claimed on Form 4684, Section B is handled differently. If the property is rental property, or other income-producing property that is completely destroyed, the deductible casualty loss amount is the adjusted basis in the property minus insurance or other reimbursement. If the property isn’t completely destroyed, the deductible casualty loss is the lesser of either the decrease in the fair market value, or the adjusted basis of the property before the loss minus any insurance received.
The areas covered by the disaster declaration are the New Jersey counties of Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren. New York counties include: Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Sullivan, Suffolk, Ulster and Westchester. Connecticut counties include: Fairfield, Middlesex, New Haven, New London and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London County.
For more information, contact Liberty at 973-842-2097.
