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FIRM
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MARCUMRACHLIN
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Hurricane Relief Center |
Service Areas
Insurance Assistance
- Assistance with documenting losses, developing inventories, reporting requirements,
working with agents and adjustors, etc.
- Understanding policy provisions (deductibles, exclusions, co-pays, limits, etc.
- Creating an inventory of damaged or destroyed property
- Understanding or evaluating property or life settlements
- Assistance in filing appeals for denied claims
- Budgeting insurance proceeds and expenses
Tax Return Filings and Other Tax Issues
- How to file a casualty loss on an individual tax return
- Documenting and reporting non-reimbursable medical expenditures
- Tax preparation services
- Understanding the taxation of insurance proceeds and expense reimbursements
- Understanding the taxation of unemployment income due to job loss
- Recreating lost tax records
- Managing retirement plan distributions and loans
Financial Planning
- Cash flow planning
- Assessing future insurance needs and alternatives
- Education funding for retraining due to injury or death of working spouse
- Planning financially for unexpected future disasters
- Strategies to recover financially in the event a primary wage earner is deceased
- Estate planning including review of existing wills, trusts, etc.
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We hope that you and your family were
not severely affected by the recent storm. We realize that
you may have experienced some degree of property damage.
In addition to insurance benefits, you should be aware that
you may be entitled to a tax deduction as a result of that
damage.
Hurricane Wilma
Gulf Opportunity Zone Act of 2005
On December 21, 2005, President Bush Signed H.R. 4440, the Gulf Opportunity Zone Act of 2005,
extending several provisions of the previously signed Katrina Emergency Tax Relief Act of 2005
to those areas affected by Hurricane Wilma. The provisions expected to have the greatest impact are:
- Employee Retention
Credit
- Removal of the usual casualty loss restrictions (10 percent of AGI and a $100 floor)
- relaxation of the strict rules governing early distributions from retirement plans and IRAs
Depending on your specific facts and circumstances, the impact of the Act may be even more
significant.
IRS Grants Tax Relief
The IRS has granted relief for taxpayers affected by Hurricane Wilma. Deadlines to file returns,
pay taxes and perform other time-sensitive acts are postponed until February 28, 2006. The postponed
deadlines apply to tax returns or tax payments with original or extended due dates falling on or after
October 23, 2005, and on or before February 28, 2006. The extended deadlines cover the October 31 date
for filing quarterly federal employment and excise tax returns, the December 15 due date for corporate
estimated tax payments, and the January 15 due date for individual estimated tax payments. The IRS
will also abate the interest and late filing or late payment penalties that would otherwise apply
during this period. Taxpayers who receive a penalty notice should call the number on the notice to
have the interest and penalties abated.
Affected Taxpayers and Disaster Areas
The relief applies to individuals who live in the disaster area and to businesses with a principal
place of business in the covered disaster area. Those who are not in the disaster area, but that have
books, records or their tax professional's office in the area, are also entitled to relief. Relief
workers working for recognized organizations in the disaster are covered by the relief. Affected
taxpayers should write "Hurricane Wilma" in red ink at the top of their returns and documents. The
IRS disaster hotline is 1-866-562-5227.
Florida counties in the Federal Emergency Management Agency (FEMA) disaster area include: Brevard,
Broward, Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Indian River, Lee, Martin,
Miami-Dade, Monroe, Okeechobee, Osceola, Palm Beach, Polk, St. Lucie and Sarasota.
Hurricane Katrina
On September 23, 2005, the President signed into law the Katrina Emergency Tax Relief Act of 2005
Casualty Losses
The tax treatment of business casualty losses was not changed by the Act,
but individuals in the Katrina disaster area who sustain casualties directly
attributable to Katrina (on or After August 25, 2005) and within the Katrina
disaster area (for Florida, generally Dade, Broward, and Monroe counties) will not
be subject to the normal 10% AGI reduction or the $100 floor. That means that
directly related Katrina casualty losses of individuals will be itemized
deductions deductible in full on schedule A, without the normal reduction
calculations that normally curtail or eliminate such deductions. Further,
these allowable deductions are allowed for AMT purposes as well. And, in
Presidentially-declared disaster areas for Katrina, there is an option to
deduct the losses in the year of the loss (2005) or in the previous tax year (2004).
It should be noted that only Katrina applicable casualty losses of individuals
qualify for this special treatment; any other casualty losses are subject to the
normal rules and limitations. And, of course, you would need to be able to itemize
deductions in order to take advantage of the change. But for those who sustained
uninsured losses and / or "hurricane deductible" hits on our insurance policies,
there is some very valuable tax planning to do in the immediate
future.
There are several ways to compute
casualty losses for individuals, but because of the removal of the normal limitations,
it is important to gather all relevant information on losses, including landscaping,
flooring, cars, furnishings, patios, roofs, glass, refrigerators, walls, the whole bit.
Not all of these items were covered by insurance, particularly now with the hurricane deductibles.
Tax Payments and Filings
The deadline for affected taxpayers has been extended from January 3, 2006 to February 28, 2006,
and this includes excise and employment taxes. However, this relief has always applied to "affected
taxpayers," so the usage of these provisions should be based upon the ability to show that the
taxpayer was "affected."
Early Distributions from Retirement Plans
The Act provides for penalty-proof distributions from retirement plans such as IRA's and
401(K)'s, but those who want to avail themselves of these provisions must have had their
principal residence in the Katrina disaster area and actually suffered an economic loss.
What is nice about this provision is the generous period of time to put back the funds and
avoid taxation, as well as the generous 3-year spread if you do not pay back the distributions
all without early withdrawal penalty. And there is no requirement for usage of the funds,
just an economic loss and principal residence in the Katrina disaster area.
Charitable Contributions
The Act has provided much more generous charitable contribution deduction allowances for
individuals that make cash donations through the end of this year. This includes exemptions
from the phase-out for high income taxpayers.
For individual taxpayers who are charitably inclined, even if not for Katrina, this is a
generous provision, but remember it is for cash contributions after August 27 through the
end of this year.
As a Florida based accounting firm for nearly 50 years, we understand the far-reaching
implications of hurricanes. Additionally, we are experienced in the damage assessment
process.
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