by BILL BISCHOFF

While Hurricane Irene turned out to be milder than expected, it still caused deaths, injuries and an estimated $5 billion to $7 billion in property damage. And Irene was not the only big problem this year. In the spring we had devastating tornadoes in Missouri and widespread flooding in the Midwest. The sad truth: natural disasters occur every year in the U.S. because this is a big country. If you’re unlucky enough to suffer a disaster-related casualty, here’s what you need to know about the federal income tax implications.

Theoretically, our beloved Internal Revenue Code allows you to claim an itemized deduction on your Form 1040 — for personal casualty losses that are not covered by insurance. Exactly what is a casualty loss? It’s when the fair market value of your property or asset is reduced or wiped out by a hurricane, flood, storm, fire, earthquake or volcanic eruption (not to mention sonic boom, theft, or vandalism).

In reality, however, many disaster victims won’t qualify for any personal casualty loss write-offs because of the following two rules.

To continue reading, go to Natural Disasters and Your Taxes.

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