tOn August 25, 2017, Hurricane Harvey made landfall near Port Aransas, Texas. It is the first major Hurricane to strike South Texas since Hurricane Celia in 1970 and the first category 4 Hurricane to strike the United States since Hurricane Charley in 2004. But, the category of the storm doesn’t tell the full story. Hurricane Harvey dropped 40-52 inches of rain on Texas and Louisiana. One gauge in Highlands Texas recorded 51.88 inches of rain, breaking the record for rain from one storm in the continental US.
Today, one month later, we are only beginning to comprehend the scope of damage. Economists estimate the storm will cost $180 billion, surpassing Hurricane Katrina’s $160 billion, making Harvey the most expensive storm in US History. At Fitts, Roberts, and Co., P.C. we are committed to serving our clients and helping them recover and rebuild. The purpose of this communication is to highlight two ways we can immediately help our clients.
#1 Casualty Loss Deduction
The IRS allows individuals and businesses to claim disaster-related casualty losses, as part of their itemized deductions, on their federal income tax return. Losses are calculated as follows:
Fair Market Value (FMV) before the storm
Minus FMV after the storm
Minus insurance reimbursement(s); if any
Equals Gross Casualty Loss subject to 10% of Adjusted Gross Income (AGI) threshold *
*There are some limitations on the total amount of the deduction.
Fair market values are subjective and must be well documented. And, losses that cannot be deducted are added to the cost basis of the property. Please contact us so we can help your family better prepare this calculation.
#2 Which tax year to deduct the loss?
Individuals and businesses can claim the disaster-related losses on their 2017 tax return or their 2016 tax return. If the 2016 return has already been filed, we can help prepare an amended return. Please contact us so we can help your family determine which tax year is most advantageous.
Over the next year, our region will adjust to a new normal—life after Hurricane Harvey. We have seen this before. When Hurricane Celia made landfall in 1970, our firm had been in business six years. In 2008, our 44th year in business, Hurricane Ike crossed Galveston Bay. Weather changes, but, our firm’s commitment to clients will never change. Today, more than ever, Fitts, Roberts, and Co., P.C. offers experience, expertise, and objectivity to help your family remain #HoustonStrong.
5718 Westheimer, Suite 800
Houston, Texas 77057
Fax: (713) 260-5240