The Franchise Tax Board today announced special tax relief for California taxpayers affected by the August 2014 Napa earthquake.
President Obama declared Napa and Solano counties a major disaster on September 11, 2014 and 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.
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.
