Red TapePeople are incredulous when told it is possible to get a tax refund of all income taxes paid during 2014 to 2017 because of damage to their property from Hurricane Harvey.

Of course, getting a refund of 4 years income taxes depends on the amount of damage you incurred.   The refund will be the lesser of the refund supported by the Hurricane Harvey damage or all the income taxes paid in 2014 to 2017.

Who Does Not Qualify?

Everyone qualifies if: 1) they paid taxes in 2014 to 2017, 2) they owned property damaged by Harvey and 3) they do not owe the IRS and are not behind on a student loan.

How Does it Work and Why Hasn’t My CPA Called Me?

The tax refund is triggered by: 1) a casualty in a disaster area and 2) a tax deduction related to the casualty. IRS Tax Code 165 allows for tax deductions for damages caused by casualties; it was passed in 1954, so this is not a new program.  Your tax preparer may not have called you because he or she did not know you flooded or may not be familiar with this section of the IRS Tax Code.  There are over 70,000 pages of IRS Code and explanatory documents.  No one person knows all of it.

Why Doesn’t FEMA or Disaster Assistance Programs Tell Me About This?

Though it is not a new program, few are actually aware of the tax deduction victims are eligible to take caused by a casualty due to a disaster. FEMA and the other disaster assistance organizations are primarily focused on what they can do for flood victims, not on outside programs.

Under normal circumstances, individuals are subject to a casualty loss threshold of 10% of adjusted gross income (AGI) before relief is allowed. However, Congress waived the 10% AGI threshold for individuals in affected areas for the recent storms. This included Hurricane Harvey, Hurricane Maria, Hurricane Irma, and the fires in California.

How Long Does it Take?

We can do our work of coordinating and filing your refund application in about 1 to 2 weeks. The IRS reports they send 90% of all refund requests in 21 days or less.  The IRS is expediting Harvey refunds, so they may be received in as little as 4 weeks.

Conclusion

If you own property flooded by Hurricane Harvey, and you paid income taxes in 2017, you are likely due a federal income tax refund.  After all, it is YOUR money!

 

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