There’s no doubt that 2017 was a year plagued by wildfires that resulted in catastrophic destruction to the environment and personal property. In October alone, wildfires that tore across Northern California numbered more than a dozen. Some of these stand out as among the most damaging to ever hit the state.
In light of the devastation, President Trump declared that a major disaster existed in the State of California. Following that disaster declaration issued by the Federal Emergency Management Agency, the IRS announced that affected taxpayers in California would receive tax relief.
If you have suffered a loss to personal property due to the recent California wildfires, you may be eligible for special tax treatment.
Usually, a personal loss from a casualty or theft must exceed 10 percent of your adjusted gross income to be deductible; but for losses arising in the California wildfires disaster areas in 2017, that 10 percent threshold is waived. However, the dollar threshold for net losses, which is normally $100, is increased to $500 for losses in this disaster.
|Loss Threshold for Deduction||Normally||Due to Wildfires|
|% Adjusted Gross Income||Must exceed 10%||No threshold|
|Minimum Amount of net losses||$100||$500|
Deduction may be available even if you don’t itemize
Generally you must itemize your deductions in order to take a casualty or theft loss. However, under special rules available for losses due the California wildfires disaster, you can take an additional standard deduction for the amount of your net loss even if you don’t itemize.
Consult your tax professional
Facing loss as the result of a natural disaster is burdensome. Now is the time to lessen at least some of your loss by taking advantage of the tax benefits provided for those who have suffered from this disaster. As always, be sure to contact your tax professional (phone 916-372-8577), in order to get a full understanding of the benefits you may be entitled to.