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For more on that catastrophic tax deduction.
I'm joined by Irish cop bad managing director of wealth health financial planning RE rich -- I've heard of big tax deductions.
For health reasons -- -- have a big hospital bill I mean big.
But I've never heard of this what is it who's eligible.
Well hi Gerri first of all its nice to see it's it's actually casualty loss and it's something that's.
Under the IRS code specifically 165 a code allows you to take an itemized deductions for losses that even -- As a result of damage or destruction from an event like hurricane sandy.
There's a there's a rule though they have to -- and this is with respect to.
The loss itself it's only for itemized deductions those who itemize not people who take the standard deduction right.
And so that's one of the limits and be sure lots have to because -- its -- And I got to let me claim that it for some small amount well your loss has to be in excess of 10% of your adjusted gross income so for instance it.
-- for instance if your adjusted gross income as a 100000 dollars 10% of that is 101000 dollars your loss need to be in excess and you only get to write off the -- -- in excess of that 10%.
So there is a limitation here.
The one thing I think that's important though is that in the past there have been under disaster relief situations.
The situations under Katrina William Wilma I'm Reid where that's gone away so -- been able to allow them to the loss deduction.
Even if it's not over 10% of your -- that's not happened yet we need legislation had that happened but we might be seen that down the road.
-- -- -- -- -- Has been about that.
I did tell you that rich you know the good thing that I wonder about.
It's when you take this deduction.
Is the big red flag to the -- actually -- say well we definitely have to look at that this person's filing because -- just make sure that it's everything it should be.
Am I gonna get audited just because I take the deduction.
Well look I mean in this situation Mena as you know I'm I'm I'm in Hoboken this whole area in new York New Jersey Connecticut I think most areas -- did you know disaster.
Area confirmed by the government and with the amount of violence gonna.
The going in with this loss I don't really think so we have to make sure that you're not seeing -- -- about -- you know you're not taken the loss.
That's inclusive of the insurance.
That you're gonna get for coverage because of course the loss is not gonna be.
Inclusive of the insurance you have to reduce it by the amount -- received.
And he really should be an area that's been declared a disaster town right I mean.
Well stop number one if you're even thinking about taking this deduction -- to be able to prove that you deserve -- right yeah.
Absolutely always have to be able to -- to prove a deduction but I think in this case.
You know even if you're not in an area that's considered a disaster under FEMA.
The reality is this is a provision within the tax code that allowed you to take that loss just make sure you documented.
There's a form 4684.
Whereby you calculate your report your loss remember this is not a credit so it's not a dollar for dollar reduction in your taxes that the deduction now.
The you know it's a little bit right now let me ask you this -- isn't trying to prove this obviously -- may need some kind of you know I need to be able to prove that you know I had to replace.
May be a part of my house or my garage or another structure on my property.
Is it is it worth while to take pictures and how -- -- decent.
-- absolutely no taking pictures is really important.
If you have any old receipts.
Make sure you get those if you've lost receipts and in this disaster.
Maybe you can go back to that company where you purchased.
The things that you've lost if you've had improvements to the home look -- prior appraisers.
Reports may be just refinancing you have a mortgage refinancing appraisal that was done.
You know if you've taken deductions may be that evidence.
Something in prior years you can request prior year's tax returns from the IRS.
But absolutely look to compare herbal sales.
Look to real turtle tank you know will trip -- though dot com.
There's there's a variety of that -- is out there to go for this kind of information and rich would tell you that's really valuable advice for our viewers out there who have been in the path of this storm and frankly could be in the path of the next storm which is coming -- just a little later this week opportunities for coming on tonight it's always a pleasure to have you -- thanks Gerri appreciate it.
And still to come my two cents more in one year ago there was a --