(PRWEB) April 06, 2010
Virginia Beach, VA (Vocus) April 6, 2010 -- Taxpayers residing in federal disaster areas of Massachusetts, Rhode Island and West Virginia now have an extended deadline of May 11 to file their federal and state tax returns. For residents of those areas who have filed a 2009 return, Liberty Tax Service offices will offer free amended 2009 tax returns. Filing a loss on a 2009 return will help taxpayers receive any refunds due that may aid in rebuilding.
"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 John Hewitt, CEO, of Liberty Tax Service. "Our office is open to provide service and free advice for the tax impact of claiming losses."
Special circumstances apply because the President has declared certain areas federal disaster areas due to recent severe flooding. 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.
The National Disaster Relief Act of 2008 increased benefits for taxpayers experiencing casualty and theft losses from December 31, 2008 through December 31, 2009. One main benefit is that all taxpayers can now reap a tax benefit from declaring their losses, whether they itemize their deductions or not, and regardless of their adjusted gross income level.
The requirement that the total of all casualty and theft losses must be reduced by $500 does apply but they do not have to be reduced by 10% of the taxpayer’s adjusted gross income if in a federally declared disaster area.
There is also a provision for a five-year net operating loss carryback for qualified natural disaster losses. IRS has also waived "certain mortgage revenue bond requirements for affected taxpayers and allows the bond proceeds to be used for rebuilding."
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.
Massachusetts Federal Disaster Areas: Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk and Worcester counties.
Rhode Island Federal Disaster Areas: Kent, Newport, Providence, and Washington counties.
West Virginia Federal Disaster Areas: Fayette, Kanawha, Mercer and Raleigh counties.
About Liberty Tax Service
Call 866-871-1040 to be directly connected to the nearest Liberty Tax office. Liberty Tax Service is the fastest growing retail tax preparation company in the industry’s history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 7,000,000 individual income tax returns. With 41 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service (NYSE:JTX).
Liberty Tax Service provides computerized income tax preparation, electronic filing, and online filing through eSmart Tax. Each office offers customers audit assistance, a money back guarantee, and free tax return checking. The Liberty Tax Service franchise opportunity is #9 on the fastest growing franchises list of the 2010 Entrepreneur “Franchise 500.”
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