Tax Deduction Consulting: Fire Loss Deductions Hilo HI
Financial Management Solutions, Inc.
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The Cornillez Group, LLC
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Tucker Wealth Management, Inc.
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Pearl City, HI
Advantage Group, LLC
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Tax Deduction Consulting: Fire Loss Deductions
Proving Deductions for Fire Loss
Whenever you are discussing the idea of proving deductions during an audit, the first thing you are told is to keep very good records. What happens when the lost of those records is the problem? How difficult is proving deductions for fire loss?
One of the important keys to success in tax preparation is the keeping of adequate records. The person who is very careful and keeps very good records of his property, its value, and his expenses is going to find tax preparation time much easier. He will also be more prepared for a possible audit and will have less difficulty should one occur. However, what if losing your records is the problem? This could happen as the result of a disaster such as a house fire. How difficult is proving deductions for fire loss?
The IRS has a reputation of being a bit more understanding over recreated records and even estimates when the loss of the original records is the result of a disaster such as a fire rather than carelessness. You will have a little more laxity in establishing estimates of your property and its value. So, the first thing to do is to establish that a disaster occurred. It is not a person's first instinct after losing their home to a fire to start taking pictures of the disaster, but since documentation of loss is going to be important both for insurance and tax purposes; this is the right thing to do.
You are going to be able to get away with estimating the loss of what would normally be found in a home. It is when you claim that your priceless collection of rare baseball cards or Van Gogh paintings went up in smoke that you are going to be challenged. It is possible to recover some proof of these unusual items and their value from other sources such as copies of credit card statements. As with many other deductions, the best thing you can do is claim what you think is correct and fair and hope for the best. Begin the process of documentation immediately.
If you have lost your important records as a result of a fire, this advice might seem a bit like telling you to close the barn door after the cows have already escaped, but a fireproof safe for your important documents should be something everyone has in their home. They are inexpensive and everyone has records and valuable papers that should be protected from loss. This is good advice not only for the taxpayer, but also a fireproof safe can protect vital records needed for insurance claims. They can even protec...