Wednesday, April 25, 2007
Hurricane Katrina - How To Use Your Business Loss To Get A Refund on 2004 Taxes
With the monolithic losings caused by Katrina, the economic system of the Gulf Seashore part is in extremely bad shape. Fortunately, there is a oddity in the tax codification that tin aid you generate a large refund from your 2004 taxes.
Apply Losings to 2004 Taxes
When a large geographic country endures a disaster, the President can declare it a federal catastrophe area. President Shrub have made such as as a declaration for the Gulf Seashore area.
While youve probably heard such declarations happen over the years, I doubt it intends much to you. The declaration, however, have major deductions for recovery efforts. Initially, the declaration of a federal catastrophe country intends the federal authorities is going to supply catastrophe relief loans, particular grants that dont have got to be repaid, unemployment benefits and a assortment of other assistance. It also signifies a major tax interruption for impacted businesses.
When a business endures a loss, the tax deduction must typically be made in the twelvemonth the loss occurred. With Hurricane Katrina, the tax deduction would typically happen when you register taxes in 2006. The problem, of course, is 2006 is a very long clip from now if your business is destroyed. You will happen this hard to believe, but the Internal Revenue Service is here to help.
The Internal Revenue Service is going to give you cash. Under current tax law, you may do a particular election to subtract your business losings caused by Katrina on your 2004 taxes. By doing this, you make not have got to wait till 2006 to get a tax refund. You dont have got to do this, but it may be the cardinal to getting necessary cash.
To make the particular election, you must claim it on your 2004 taxes. If you have got already filed taxes for 2004, you can register an amended tax tax return claiming the deduction.
Using this tax strategy can assist generate badly needed cash. Brand certain you prosecute the strategy with the aid of your tax professional. If all your records are destroyed, you can tell transcripts of past tax tax returns from the IRS.