ATLANTA - Taxpayers impacted by severe storms in Georgia last year can increase their standard deduction by claiming their net disaster losses suffered from a federally declared disaster.
A new tax law called the National Disaster Relief Act allows all taxpayers, not just those who itemize, to claim the casualty loss deduction regardless of the taxpayer's adjusted gross income level. To take the deduction, taxpayers must reside in a federally declared presidential disaster area. Additionally, the law waives a requirement limiting casualty losses to those that exceeded 10% of the taxpayer's adjusted gross income.
During last year the following counties were declared presidential disaster areas beginning March 14, 2008: Bartow, Burke, DeKalb, Floyd, Fulton, Jefferson and Polk counties. In addition, on May 11, the federal government declared Bibb, Carroll, Douglas, Emanuel, Jefferson, Jenkins, Johnson, Laurens, McIntosh and Twiggs counties as federal disaster areas.
"Taxpayers affected during that time and residing in those eligible counties would qualify for the increased deduction," said IRS Spokesman Mark Green. "With the new law, taxpayers will be able to deduct disaster losses, even if they don't itemize, however the deduction is limited to unreimbursed losses" said Green. You cannot claim losses that were covered by insurance.
The standard deduction is a dollar amount that reduces the amount of income on which you are taxed. It is a benefit that eliminates the need for many taxpayers to itemize actual deductions, such as medical expenses, charitable contributions, and taxes, on Schedule A of Form 1040.
The standard deduction for most taxpayers who do not itemize their deductions on Schedule A of Form 1040 increased in 2008. This year's increased basic standard deductions are: $10,900 for married couples filing a joint return and qualifying widows and widowers; $5,450 for singles and married individuals filing separate returns; and $8,000 for heads of household.
Most taxpayers have a choice of either claiming the standard deduction or itemizing their deductions. If you have a choice, you can use the method that gives you the lower tax.
Taxpayers may download forms and publications from the official IRS Web site, irs.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.