With wildfire season just behind us and hurricane season upon us, many taxpayers may be wondering if their taxes will be affected by natural disasters. As your clients’ trusted advisor, you can help them understand how they may be impacted, and you can use this information to help educate them.
The Tax Cuts and Jobs Act Act has made some changes to how disasters may affect your clients’ itemized deductions. If your client is in a federally-declared disaster, nothing changes, and they may still get the itemized deduction. However, if your client is in a non-federally-declared disaster, the itemized deduction goes away.
It’s important to note, if your clients have gains from insurance proceeds, they can still offset disaster loss.