Tax Relief for Flood Victims in Wisconsin

Jim Brandenburg, CPA, MST, Shareholder - Tax   email | bio
February 2009

Many individuals were impacted by the severe storms of 2008. One way of recouping losses from the storms is through tax savings. "Casualty Loss" laws provide itemized deductions for personal losses from fires, storms, car accidents, thefts and similar "sudden, unexpected, or unusual" events. These laws are most applicable for disaster areas designated by the President. Thirty Wisconsin counties were given this classification following the severe storms in June.

If you incurred a loss from these storms, you may be eligible for a casualty loss deduction. First, determine the amount of your loss which is measured as the lesser of the drop in value or the basis (usually the cost) in the property. Appraisals may be needed to establish pre- and post- loss values. This loss figure is then reduced by three amounts:

1. The amount reimbursed or reimbursable by insurance. This amount will be deducted regardless if an actual claim is filed;
    
2. $100 per event (not per item damaged); and
    
3. 10 percent of your adjusted gross income.

The remaining amount is your deduction. Deductions must be taken the year the loss is incurred. Any casualty loss in a disaster area designated by the President can be deducted the year before the loss was incurred. This may increase tax savings from the loss and entitle you to a quicker refund.