![]() |
|
![]() |
|
![]() |
|
![]() |
With the massive losses caused by Katrina, the economy of the Gulf Coast region is in extremely bad shape. Fortunately, there is a quirk in the tax code that can help you generate a large refund from your 2004 taxes.
Apply Losses to 2004 Taxes
When a large geographic area suffers a disaster, the President can declare it a federal disaster area. President Bush has made such a declaration for the Gulf Coast area.
While you've probably heard such declarations occur over the years, I doubt it means much to you. The declaration, however, has major implications for recovery efforts. Initially, the declaration of a federal disaster area means the federal government is going to provide disaster relief loans, special grants that don't have to be repaid, unemployment benefits and a variety of other assistance. It also signifies a major tax break for impacted businesses.
When a business suffers a loss, the deduction must typically be made in the year the loss occurred. With Hurricane Katrina, the deduction would typically occur when you file taxes in 2006. The problem, of course, is 2006 is a very long time from now if your business is destroyed. You will find this hard to believe, but the IRS is here to help.
The IRS is going to give you cash. Under current tax law, you may make a special election to deduct your business losses caused by Katrina on your 2004 taxes. By doing this, you do not have to wait till 2006 to get a tax refund. You don't have to do this, but it may be the key to getting necessary cash.
To make the special election, you must claim it on your 2004 taxes. If you have already filed taxes for 2004, you can file an amended tax return claiming the deduction.
In Closing
Using this tax strategy can help generate badly needed cash. Make sure you pursue the strategy with the help of your tax professional. If all your records are destroyed, you can order copies of past tax returns from the IRS.
Richard Chapo is with http://www.businesstaxrecovery.com - recovering overpaid taxes for small businesses. Visit our article page - http://www.businesstaxrecovery.com/articles - to read more tax articles.
Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This... Read More
As we enter mid-March, taxpayers begin to become very interested... Read More
Yes, the tax season is upon with the first filing... Read More
Does this scene sound familiar? It's April 7. You haven't... Read More
Have you been thinking about incorporating your small business or... Read More
Most people look forward to getting their tax return, but... Read More
Knock-Knock-KnockWho's there?The IRS!The next quarterly payment of estimated income tax... Read More
Most people trying to make a crust online (or offline... Read More
OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More
Running a home based business reaps many wonderful tax deductions... Read More
It may not be high on the list of wedding... Read More
Taxpayers have two easy and convenient options for getting copies... Read More
Estate taxes. It's not enough to simply know they exist,... Read More
It's a moment every person dreads. You pick up the... Read More
Statistics for IndividualsUnfortunately, the IRS increased its rate of auditing... Read More
If you have recently started an Internet or home business,... Read More
The Internal Revenue Service has certified the 2006 Toyota Highlander... Read More
As a gentleman was leaving my class recently, he wanted... Read More
Why a Corporation Helps Save You TaxesThe Tax Rates (Notice... Read More
All states also have their own tax system. Typically there... Read More
As teachers and students head back to school following a... Read More
Should I take wages or dividends from my privately owned... Read More
IRS Tax forms can be confusing.Am I a 1099 or... Read More
April 15 - The most dreaded day of the year... Read More
Someone once said, 'the best way to calculate your taxes... Read More
It's a moment every person dreads. You pick up the... Read More
In the rush to get tax returns prepared and filed... Read More
You've been feeling uneasy (perhaps even guilty) because you've failed... Read More
Do you realize that some tax forms ask you to... Read More
We all love to criticize the IRS, don't we? And... Read More
As tax time approaches, many home-based business owners begin completing... Read More
Following is a reproduction of the IRS's rules and requirements... Read More
Should I take wages or dividends from my privately owned... Read More
As an employer, you must pay employment taxes if you... Read More
OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More
All states also have their own tax system. Typically there... Read More
Tilting the Tax Laws in Your Favor.In order to accelerate... Read More
In the latest Star Wars episode, the evil empire executes... Read More
Many Americans believe that an IRS debt is a debt... Read More
According to the IRS, taxpayers underpay their taxes by some... Read More
Often people fall on hard times and stop paying on... Read More
Many small businesses complain when confronted with the expense of... Read More
Q: I was contacted by the city tax collector to... Read More
Misconceptions, misinterpretations and just plain "untruths" are floating about income... Read More
"Settle for Pennies on the Dollar! IRS debts settled for... Read More
Your days as an entrepreneur and businessperson are consumed with... Read More
Are you in the middle of a disagreement with the... Read More
As a gentleman was leaving my class recently, he wanted... Read More
As we enter mid-March, taxpayers begin to become very interested... Read More
Own residential rental properties? This article discusses how income from... Read More
Tax Tax |