I was in the 2020 Texas Winter Storm and have read that I qualify for a disaster relief claim on my taxes, how do I do that?

[jessicalillimcph]

I just want to know how to add it to my return, my husband and I couldn't work and didn't receive paychecks, I read that this doesn't have to be an itemized deduction

[HelenC12 · Accepted solution]

The Texas severe winter storm is reported as a casualty loss. Casualty losses are an itemized deduction and the full amount (less the first $500) are on Schedule A, line 15. 

In TurboTax you will follow these steps to report the 2021 storm damage on your 2020 return

1. Federal
2. Deductions and Credits
3. See All Tax Breaks
4. Find the one with Disaster, Casualty, Thefts - it is worded a little different on different versions of the software
5. Add your casualty or theft event
6. Put the description - Texas Winter Storm Damage
7. Personal Property
8. Federally declared MAJOR disaster
9. FEMA disaster code EM-3554-TX
10. Continue with the onscreen interview until complete.  

Source MaryM428

[Opus 17]

If you are in a federally declared disaster area, that does not mean free money.

It means that you gain an automatic extension on the deadline to file your tax return, and it means that you may be eligible to deduct losses from the storm that were not covered by insurance.  However, the casultly loss deduction on your tax return has high barriers to actually getting any tax benefit, the loss must be more than 10% of your income before it starts to become deductible.

Other than those 2 things, checking the box for a disaster area doesn't change your tax return. 

[jessicalillimcph]

Thank you for clarifying! I was specifically looking for how to fill it out because I couldn't find it. Thank you!

[kerryfromOK]

The rules on this have changed for 2020 returns!!! Please see Turbotax or IRS information on temporary casualty losses; for 2020 the $100 amount if raised to $500 but you can deduct EVEN IF YOU DON'T ITEMIZE!!!!!!!!!

[DoninGA]

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@kerryfromOK wrote:

The rules on this have changed for 2020 returns!!! Please see Turbotax or IRS information on temporary casualty losses; for 2020 the $100 amount if raised to $500 but you can deduct EVEN IF YOU DON'T ITEMIZE!!!!!!!!!

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I think you need to carefully read the Form 4684, Casualties and Thefts (2020) instructions - https://www.irs.gov/forms-pubs/about-form-4684

[Claude4]

This is what I have found.  A key reference is "Topic No. 515 Casualty, Disaster and Theft Losses" at

 https://www.irs.gov/taxtopics/tc515 . It says "If you have a qualified disaster loss you may elect to deduct the loss WITHOUT ITEMIZING YOUR DEDUCTIONS. Your net casualty loss DOESN'T NEED to exceed 10% of your adjusted gross income to qualify for the deduction, but you would reduce each casualty loss by $500 after any salvage value and any other reimbursement. For more information, see the Instructions for Schedule A (Form 1040) or Instructions for Form 1040-NR."   

In addition, "If your loss deduction is more than your income, you may have a net operating loss (NOL). You don't have to be in business to have an NOL from a casualty. For more information, refer to Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts." 

Interestingly, Texas "[v]ictims of winter storms that began February 11, 2021 now have until June 15, 2021, to file various individual and business tax returns and make tax payments...."  (from https://www.irs.gov/newsroom/irs-announces-tax-relief-for-texas-severe-wi[product key removed]ms  titled "IRS announces tax relief for Texas severe winter storm victims"  (If any of the links don't work for whatever reason, search by the text of the title(s) to these references.)

[moby52]

Thanks

[kerryfromOK]

For a federally declared disaster in 2020 or 2021, a special exception was enacted so that certain expenses of these disasters can be taken WITHOUT HAVING TO GO THROUGH SCHEDULE A, so taxpayers who do not itemize can still take the losses (for example, replacement costs of replacing shrubs killed by the freeze)!!’ I find that most people do not know about this. But yes, you have to look up the disaster number and specify it on the return. 

[kerryfromOK]

This is not true for the disasters of 3020 and 2021. See my answer under this post! 

[Claude4]

KerryfromOK, please clarify.  I agree that federally declared disasters can be deducted without itemizing.  First you said you agree for tax years 2020 and 2021, and then you said this does not apply for 3020 and 2021, with reference to your answer under this post.  I can't make sense of this!      

[DawnC]

I live in a federally declared disaster area, what does that mean for my taxes?  Frequently asked questions regarding this topic

When you have items that are lost or damaged as a direct result of a natural disaster, and you live in a federally declared disaster area, you may be able to take a tax deduction for the value of the property that's not covered by your insurance.

The lost or damaged items can be personal property, business property or investment property.

Not eligible for the deduction:

• Property with progressive deterioration such as termite or moth damage.
• Stolen items.
• Accidental losses of personal items, such as a ring dropped down the sink.
• Property loss or damage that’s not the direct result of a natural disaster as described above. (This restriction started in 2018 and applies through 2025.)

How to enter your federally declared natural disaster loss

You have to put the @ symbol in front of someone's name in the thread for them to be notified.   @Claude4

[TDC3Buns]

Aloha The County of Maui was declared a FEMA disaster area for a flooding event March 8, 2021 (4604-DR-HI).  The heavy rains that caused that damage also impacted us on Oahu (County of Honolulu).  The sustained heavy rains caused significant damage to my house. Can I claim the casualty loss living in the adjacent County? Thanks, Tom  

[Claude4]

Yes.  Generally, a loss that is “attributable to” a federally declared disaster will also “occur in” a disaster area, but the IRS has said that the loss does not have to occur “in” a disaster area to be deductible. Since declarations of federally declared disasters are issued on a state-wide basis, the loss must occur in the state receiving the federal disaster declaration.

[LeonardS]

No, you have to live in the area defined in the disaster declaration to claim a casualty loss.  For declaration 4604-DR-HI 

"...The following areas of the State of Hawaii have been designated as adversely affected by this major disaster:

Maui County for Public Assistance. " Ref: 4604-DR-HI Initial Notice

However, you may qualify for assistance under the Hazard Mitigation Grant Program.  Hazard mitigation is any action taken to reduce or eliminate long-term risk to people and property from natural hazards and their effects.

This link Homeowner's Guide to the Hazard Mitigation Grant Program has information you may find useful.

@TDC3Buns