Thursday, August 7, 2008

Tax Breaks & Other Deductions: Disasters

I lieu of many disasters since 911, there have been questions centered around disaster relief compensation. Actually the Internal Revenue Service does allot for relief payments and grants to those taxpayers that qualify:

1. Disaster Relief Grants:
You can exclude from your gross income a grant you receive under the Disaster Relief and Emergency Assistance Act if the grant payments are used to help you meet certain serious needs, such as housing, transportation and medical expenses. In light of the disasters over the past few years, this should help those who have suffered greatly.
2.Disaster Relief Payments:
Qualified disaster relief payments you receive are not subject to income tax, social security, or Medicare taxes. Qualified amounts paid as a result of a qualified disaster to reimburse or pay reasonable and necessary personal, family, living or funeral expenses from what is considered a qualified disaster. Other qualified payments might be repair on your personal residence or to replace damaged personal contents.
3.Damaged Mitigation Payments:
You can also exclude from income tax payments, mitigation payment grants that you receive from a state ans local government for use of potential damage from natural disasters.

If you have questions concerning tax breaks and deductions, contact a tax consultant.

No comments: