The Franchise Tax Board (FTB) announced on September 16, 2014 a special tax relief for California taxpayers affected by the August 2014 South Napa earthquake.
The President declared Napa and Solano counties a major disaster on September 11, 2014. The disaster declaration allows affected taxpayers to claim disaster losses in the current or prior tax year (2013 tax return). Taxpayers claiming disaster losses should write, “DISASTER – NAPA EARTHQUAKE 2014” in red ink across the top of their tax returns or follow their tax software instructions.
Typically, taxpayers must deduct losses only in the year of the loss. The advantage of claiming a disaster loss in the prior year is that the loss will generally reduce the prior year tax liability. This claim generally creates a refund that FTB can quickly issue.
Disaster victims who have not yet filed their 2013 tax return can claim their disaster loss on their original tax return. Taxpayers who have already filed their 2013 tax return can claim a disaster loss against that year’s income by filing a Form 540X, Amended Individual Income Tax Return. Disaster victims have until next year, April 15, 2015, to make their prior year (2013) disaster loss deduction.
Taxpayers who need copies of lost or damaged state returns should complete Form FTB 3516, “Request for Copy of Tax Return,” which is available online. Disaster victims can receive copies of tax returns for no charge by writing, “DISASTER – NAPA EARTHQUAKE 2014” in red ink across the top of their request.
A casualty loss occurs when a taxpayer’s property is lost or damaged due to an earthquake, fire, flood, or similar event that is sudden, unexpected, or unusual. Disaster victims usually qualify for a casualty loss tax deduction when insurance or other reimbursements do not cover the property damage.
For more details, please read FTB Publication 1034, Disaster Loss How to Claim a State Tax Deduction at FTB’s website at ftb.ca.gov or the IRS 547, “Casualties, Disasters, and Thefts” at irs.gov.
Source: CA FTB
2014 © Copyright Payroll Masters
This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please contact your employment attorney in connection with any fact-specific situation in which you intend to take significant employment action. Readers agree that they will not hold Payroll Masters in indemnity and Payroll Masters assumes no liability. Payroll Masters is not engaged in rendering legal or accounting services. Therefore, Payroll Masters assumes no responsibility for claims arising from the use or implementation of the above information.