Claiming Personal Casualty Losses 2009 vs. 2010

As New England flood victims continue their cleanup and renovation efforts, there is an important tax issue to consider. In federally declared distaster areas, taxpayers can elect to take the casualty loss deduction on the tax return in the year prior to the year of the disaster. If you were impacted by the flood, you should evaluate the tax consequences of including the 2010 flood losses on your 2009 return (you can amend if you've already filed) or 2010 return to determine the more beneficial treatment in your individual tax situation. There are benefits in taking the casualty losses in 2009.

Advantages of Taking the Loss on Your 2009 Tax Return

• No 10% of adjusted gross income limitation
• Floor of $100 rather than $500
• Lower tax liability resulting in a quicker potential refund and
• Lower 2010 estimated tax payment