The Heartland Disaster Tax Relief Act of 2008 provides a helping hand to people who were affected by last summer’s severe Midwestern storms.
For people who live in the federally declared disaster areas, the new legislation could mean more money to make repairs and to rebuild homes and lives. It also provides assistance for businesses and for people who sheltered and aided victims of the disaster.
Those of you who tuned in previously know that Congress allows a deduction for losses of personal property resulting from storms, earthquakes, and other sorts of unwelcome surprises. When those events come in the form of a federally recognized disaster, though, different and better tax laws apply.
If you were affected by the Midwestern storms last summer, you can take a deduction for either the amount that you paid for your damaged property, or the decrease in your property’s value, whichever is less. And unlike those lucky folks who live outside of the disaster area, you are not required to reduce your deduction by 10% of your adjusted gross income. Finally, you can claim this deduction even if you do not itemize. This means that your deduction is more valuable and more readily available.The relief act’s aid doesn’t end there, and many of its provisions are valuable. For instance, if your home was destroyed and your bank has forgiven your loan, you are not required to pay tax on the loan amount that your bank has forgiven. In addition, the act provides additional personal exemptions for people who opened their homes to storm victims, and it expands the Earned Income Tax Credit and the Hope and Lifetime Learning Credits for students who are enrolled in affected colleges. Check back with us later to learn more about these and other valuable benefits available in the new law.