by Richard Schneider, CPA (inactive)
Professor Emeritus, WSU
Last September saw significant amounts of flooding along and near highway 52, including the cities of Pine Island, Oronoco, Hammond, and Zumbro Falls. Also western Wisconsin experienced flood damage including the city of Arcadia. These are ‘federally declared disaster areas’, allowing those with a loss to their home and personal property to deduct the loss on either the 2010 or 2009 tax return.
There is a big difference in the amount of loss allowed in 2009 and 2010:
In 2010 the loss must be reduced by 10% of adjusted gross income plus $100, and the taxpayer must itemize deductions. The excess loss causing a Net Operating Loss is carried back two years.
In 2009 the loss is reduced by $500, the 10% of adjusted gross income is waived; the taxpayer is not required to itemize deductions and the amount of the loss may be added to the standard deduction. The excess loss causing a Net Operating Loss is carried back five years.
Reporting the loss as a 2009 loss will be advantageous for most taxpayers with a loss, especially those with less major damage, say a flooded basement, or a person who was renting and lost personal property, or if the government will buy out your home and you have a personal property loss. There is one major restriction and that is the amended return must be filed on or before April 18th, 2010. If you do not have final figures for your loss, just get something filed by April 18th, you can file an additional amended return at a later date correcting the figures. It would be better to underestimate your loss initially, if you are just getting something filed by April 18th.
In western Wisconsin those with flood damage in late September in the counties of Buffalo, Trempealeau, Jackson, etc., your FEMA number is 1944. In Minnesota along the Zumbro River your FEMA number is 1941.
I would urge those with uninsured damage to contact a professional tax preparer as soon as possible. If your professional preparer needs words of encouragement, or advice, they may email me at firstname.lastname@example.org. IRS resources; 2010 publication 547, see page 13, 2009 pub. 536 and 2009 form 4684 at http://www.irs.gov . If you know someone with flood damage from the September flooding in these areas pass along this article.
Currently I’m working with those with a flood loss in Pine Island, Hammond, Oronoco, Zumbro Falls, etc. I have met some very wonderful people, many of them displaced, but having a much clearer understanding and love for what’s important. Those with flood damage in these areas of Wisconsin and Minnesota did not receive any FEMA funds; not only keep them in your prayers, but assistance is most welcomed.