Form 4684 and Damaged house for hurricane Ian

[JarvisPLLC]

Wrong.  As of 03/12/2023, Hurricane Ian is not designated as a "Qualified Disaster Loss". 

Hurricanes Ian and Nicole occurred after the TCDTRA 2020 window for the special rules; therefore, losses from these hurricanes do not meet the definition of “qualified disaster loss.” As a result, taxpayers with losses from Hurricanes Ian and Nicole are currently subject to less favorable tax treatment, since only “qualified disaster losses” are eligible for a waiver of the 10% AGI limitation and for deduction without itemizing other deductions on Schedule A of Form 1040. 

There is a bill HR 1331 that is attempting to change the Hurricane Ian designation to a "Qualified Disaster Loss". The IRS does not make this determination. Tax law does.

[DoninGA]

@JarvisPLLC Then the IRS is obviously lying on this website - https://www.irs.gov/newsroom/irs-announces-tax-relief-for-victims-of-hurricane-ian-in-florida

Contact the IRS and tell them to remove this information from the IRS website since it is incorrect 

Call the IRS: 1-800-829-1040 hours 7 AM - 7 PM local time Monday-Friday

[JarvisPLLC]

DoninGA- The Champ

The IRS makes no mention on this URL provided if Hurricane Ian is a "Qualified Disaster Loss". One can still take a casualty loss, as the IRS stated, but taxpayers cannot use the special provisions under the designation of a "Qualified Disaster Loss". 

Your assertion that the IRS is lying is not accurate.

https://www.irs.gov/newsroom/irs-announces-tax-relief-for-victims-of-hurricane-ian-in-florida

Also, step back and ask yourself self, why is there this bill HR 1331 if Hurricane Ian if it already received this designation of "Qualified Disaster Loss"?

H.R. 1331 | Tax Notes

This is a hot mess. There is lots of misinformation spreading on the internet. I do not believe the misinformation is intentional, but a result of the failures of the federal government. 

I forgive your (DoninGA)  aggression directed at me. I understand your frustration on this matter.

Best Regards,

Kenneth Jarvis 

[Justin202203]

@JarvisPLLC @DoninGA @RobertB4444 @MarilynG1 @PatriciaV 

Thank you all for your help to clarify this issue.

In the turbotax software, I will select"This event is a federally declared disaster (not "qualified")", I believe that Turbotax software will only allow 10% AGI deduction when using itemized dedution not standard deduction.

Please kindly correct me if my understanding is wrong.

Thanks again.

Have a great day.

[JarvisPLLC]

Your understanding of the current tax law is correct. However, it is hard for me to believe that Hurricane Ian would not eventually be classified as a "Qualifying Disaster Loss", but it is possible that the designation does not get changed.  We provide the following options to our clients on this matter.

Option 1: Follow current tax law meaning that Hurricane Ian is not a “qualified disaster loss”. If the tax law changes later so that Hurricane Ian is designated as a “qualified disaster loss,” then file an amended tax return.

Option 2: File a tax extension to see if the tax law changes so that Hurricane Ian gets designated as “qualified disaster loss”  before the tax extension deadline.

Best Regards,

Kenneth Jarvis

[JanetF2]

Hi I have been trying to find how to enter a total of my losses not covered by insurance without having to itemize each one but am still unclear where that can be done.  I see that the amount can be added to the standard deduction but other than the form 4684 I do not see where, and from that form it seems you have to itemize separately.  I can itemize the pool equipment, boat dock repair, screen repair, Yard debris clearance, Soffit repair etc, but the contents we lost over our covered amount of $75,000 would be very complicated to list.  We had a total contents loss of $104,101 and the insurance paid $74,907.  All this including our deductible will be in excess of $70,000.

Also should i be able to do this, can it also be reimbursed from previous years return as well?

Thank you in advance for any help

[Justin202203]

@JarvisPLLC 

Hi Jarvis,

Thank you so much for your great help and provide proper solution for this.

If I still couldn't get the accurate house's FMV(before and after hurricane) before deadline 10/15/2023, can I wait to report the loss in 2023 tax return? I mean won't report any loss regarding this in 2022 tax return.

Thanks a lot and have a great day.

[JarvisPLLC]

Look into the safe harbors... You may not need to get the FMVs if you qualify for a safe-harbor election.

[Justin202203]

@JanetF2 

Hi Jane,

I am sorry I can't provide accurate answer to your question.

@JarvisPLLC @DoninGA @RobertB4444 @MarilynG1 

Hi All experts,

Can you please help out Jane's question?

Thank you very much.

[Justin202203]

@JarvisPLLC 

Hi Jarvis,

Thanks a lot for your guidence. 

Seems I can use "Federally declared disaster method—contractor safe harbor",  because there is no dollar amount limitation here, I am still checking it.

However, it brought me 3 more questions:

1)Should I have to list all damaged items one by one, or I can just add them all to report one item as loss of  house value?

2)In the turbotax online software, it still ask me to fill out FMV before and after hurricane, Can I add zero for before hurricane, and add the contract dollar amount for after hurricane.

3)I found a weird situation, after I filled out all the numbers, the Federal refund dollar amount in the turbotax online software is not changed at all regardless I select it as "a qualified disaster" or "not a qualified disaster". The result should be different, right? Did I make some mistake here?

Thanks again for your great help. Have a nice day.

[DaveF1006]

This loss is reported on form 4684 and will be entered on Schedule A.  There is however special considerations given for a federally declared disasters such as 10% of your adjusted income that is normally deducted is now waived. Also, you do not need to provide an itemized list for any of the contents lost but you may wish to keep your own itemized list on a spreadsheet just in case the IRS has questions.  This is mentioned in the instructions for 4684,  that states that you can treat the losses as a single item if the loss was to your home or other personal-use real estate: In this case, you can treat the entire property as a single item (including all buildings, improvements, trees and landscaping).

Here is how to report:

1. Go to federal>deductions and credits
2. Other deductions and credits>casualties and thefts
3. Give Hurricane Ian as a description, date, and indicate this is personal property
4. Next you will check the box indicating this is a Federally declared major qualified disaster loss
5. Next will ask for a FEMA code this is DR-4673
6. Next will ask for property information such as address, etc. This includes cost basis, meaning how much the property cost total and then your insurance reimbursement. 
7. When it asks for FMV before loss, you may estimate that total.  After loss it is zero since the insurance company has reimbursed for total loss. 
8. You can either report this in 2022, or amend your 2021 return and report it there.

Now, once all of this has been reported and if you did not have any other itemized deductions, your standard deduction will increase by the amount of your qualified loss, This will show up in line 16 on Schedule A and also on  line 12 on the 1040. There is also a form in your return calle St Ded with QDL that summarizes this deduction.

@JanetF2 

[Justin202203]

@DaveF1006 

Hi Dave,

Thank you for your setp by step guidence.

Could you please let me know where can I find tax laws regarding this "There is however special considerations given for a federally declared disasters such as 10% of your adjusted income that is normally deducted is now waived", I mean regarding " is waived"?

I am asking because I still can't understand why I got the same tax refund number when I select" a qualified disaster or a non a quailified disaster".

Thanks again and have a great day.

[AmyC]

Waived question -If you are using the sch A, for a loss, there is normally 10% of your income deducted before claiming the loss.

The disaster is reported on Form 4684 based on Pub 547, which links to Hurricane Ian as qualified. It is reported either on sch A and flows to the 1040 or it can be reported on the 1040 (page 31, 33) directly as:

Exception 4—Increased standard deduction for net qualified disaster loss.

It could be that you are itemizing with the casualty and it is more than the standard deduction plus the loss. Be sure you have the qualified disaster information entered - date, disaster id, etc. See FL-2022-19, IRS announces tax relief for victims of Hurricane Ian in Florida.

You need to look at the actual forms and see what is listed where and how. 

• In desktop, switch to Forms Mode. 
• For online, see How do I preview my TurboTax Online return before filing?

Once you determine what is happening vs how your forms should look, let us know if you need additional help.

[Justin202203]

@AmyC 

Thank you for your explanation.

There is a slection when entering From 4684, 

1)This event qualifies as a Federally declared major qualified disaster loss

2)This event is a federally declared disaster (not "qualified"),

which one should I select? When I select qualified disaster, the loss linked to addtion to the standand, and when I select not qualified, the loss linked to itemized deduction. And now the tax refund on turbotax online changed.

And please kindly review the above discussion, which I got the information is  IRS still didn't annouce Hurricane Ian is qualified disaster. Too confused here.

Thanks again.

[AmyC]

I read the above before my last reply. Wink is not an official IRS source. 

Let me go through the IRS process with you for peace of mind.

1.The disaster is an IRS announcement. It does not say qualified or not.

2. Go to Form 4684 which says to use Pub 547. It states:

1. Disaster loss See Disaster Area Losses,
2. Qualified disaster loss. See IRS.gov/DisasterTaxRelief for date-specific declarations associated with these disasters and for more information.

3. Go to qualified disaster relief and we see Hurricane Ian listed and know for a fact that it is a qualified disaster.

4. Select that you had a qualified disaster.

Feel free to print off the answers here and you can tuck this into your tax folder. If the IRS asks, you can say that you relied on tax advice of a professional.