Deducting Storm Damage for a Business
Storm damage to a business in Roxborough Park, CO, doesn’t have to damage the wallet, too. Even if the insurance company doesn’t pay out as much as hoped, Uncle Sam can help. Come tax time, tax breaks are available to help defray the expenses for the repair and replacement of items for a storm-damaged business.
What the IRS Will Cover
The key to the previous statement is the word “help.” The government helps pick up the balance of what the insurance company does not pay for the storm damage. They generally don’t cover everything, and the amount is almost always calculated to be the adjusted value of the property, whether everything or just a portion is destroyed. When making a claim, the owner must also take off the amount received from insurance. The rest is the tax deductible portion and must be filed as an itemized deduction on Form 1040, Schedule A, Form 4684 (Casualties and Thefts).
The Internal Revenue Service considers damage from these types of incidents as deductible:
- Volcanic eruption
Here are examples of damage that are not deductible:
- Normal wear and tear
- Termite damage
Is the Business in A Federal Disaster Area?
Something else to keep in mind is whether the business is in a designated federal disaster area. This will entitle the business to more tax breaks and sometimes even more time to file certain tax forms. It also changes the year in which the owner may choose to deduct the damage, providing a refund sooner in some cases. For situations such as this, it may be best to consult a professional tax advisor.
It’s Not Fun, But It Can Be Done
Storm damage isn’t fun, and neither is taxes. However, with an expert restoration specialist to help with the clean-up and a qualified tax professional to help find the right tax breaks, the business doesn’t have to remain damaged for long.