Liberty Tax Service to Offer Free Amended Returns
Liberty Tax Service offices will offer free 2003 amended tax returns and free advice for those who have suffered casualty losses due to Hurricanes Frances, Charley and Bonnie. Those suffering property losses in the areas the President has designated as Federal disaster areas of Florida may amend their 2003 tax return to claim the loss. This will enable them to get the refund sooner since they do not have to wait until their 2004 tax return is filed.
"Declaring casualty losses can be a confusing process, and our goal is to help those who are in need during a very traumatic time," said John Hewitt, CEO and Founder of Liberty Tax Service.
Taxpayers must declare casualty losses in the year they suffered them unless they are in an area determined by the President to warrant federal disaster assistance. In this case, taxpayers have a choice of declaring their casualty loss on the current year return, or deducting the loss on the prior year return. This can be done by filing Form 1040X, Amended U.S. Individual Income Tax Return. Those who decide to deduct a 2004 disaster loss on their 2003 return must do so by April 15, 2005.
Casualty and theft losses for personal property can be claimed as the result of destruction from unanticipated weather events such as hurricanes, tornadoes, or from burglaries and break-ins, by filing Form 4684, Casualties and Thefts, Section A. If the property is not completely destroyed, determine the loss by figuring the decrease in fair market value minus any insurance reimbursements. Then subtract another $100 for each casualty or theft that occurred during the year. A total of all casualty and theft losses must be further reduced by 10% of the taxpayer's adjusted gross income. Renters may qualify to declare a casualty loss for damaged furniture and property in their residence.
Taxpayers who have incurred property losses should file insurance claims promptly. Only those losses that are not covered by insurance should be claimed on Form 4684.
The limits above do not apply to business and income producing property, such as rental property, which are claimed on Form 4684, Section B. If the property is rental property, or other business-producing property that is completely destroyed, the deductible casualty loss amount is the adjusted basis in the property minus insurance or other reimbursement. If the property isn't completely destroyed, the deductible casualty loss is the lesser of either the decrease in the fair market value, or the adjusted basis of the property before the loss.