As hurricane season begins, experts are sounding the alarm.
The 2025 season could bring up to 19 named storms, including potentially five major hurricanes, marking an above-average year for the Atlantic basin.
Homeowners are urged to prepare now and understand tax relief options that may soften potential financial hardships due to rising repair costs. Last year, Hurricane Helene caused over $78 billion dollars in damages, according to the National Oceanic and Atmospheric Administration (NOAA). Hurricane season runs from June 1 through Nov. 30 each year.
“Hurricanes can be financially devastating,” says Paul Miller, a certified public accountant (CPA) and managing partner of Miller & Company in New York City. “Beyond property damage, there’s often a major disruption to employment and income, plus out-of-pocket costs for temporary housing, food and repairs.”
The good news is that homeowners can get at least some financial and tax relief after a natural disaster strikes. From claiming casualty loss deductions to taking more time to file your tax return, there are key tax breaks that can help.
“The financial recovery process can stretch for years, and having access to tax relief can make a meaningful difference,” Miller says.
1. Claim a casualty loss deduction
If you experience damage from a hurricane, you may be able to claim a casualty loss deduction on your federal income tax return. A casualty loss refers to damage or destruction, or an unusual event, such as a hurricane, tornado, or flood.
For tax years 2018 through 2025, individuals can claim a casualty loss only if the event is a federally declared disaster. If your loss isn’t attributed to a federally declared disaster, you generally won’t be able to claim it.
“Unless Congress extends these provisions from the Tax Cuts and Jobs Act (TCJA), we’ll likely revert to the pre-2018 rules, which allowed individuals to deduct personal casualty losses even when not linked to a federally declared disaster,” Miller says.
If that happens, it “would broaden the deduction again and could benefit taxpayers experiencing localized or personal property damage that isn’t declared a disaster area by the federal government,” he says.
Under current tax rules:
- To claim a casualty loss, you typically need to itemize your deductions using Schedule A and complete Form 4684, which reports gains and losses from casualties and thefts.
- However, if the loss is considered a qualified disaster loss, which is a specific catastrophic event identified by the IRS (you can find a list here), you can claim the deduction without itemizing. A qualified disaster loss is not subject to the 10 percent reduction in AGI, and the $100 subtraction increases to $500. It is best to seek a CPA or tax professional to help you deduct the correct amount on your tax return.
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This article originally appeared here and was republished with permission.
