Hurricane Sandy Insurance Claims: Are you Covered?
Hurricane Sandy Insurance Claims as Tax Deductions for my losses?
Hurricane Sandy was the second most costly hurricane ever to hit the United States. Estimates of total losses as at June 2013 total over $68 billion, surpassed at the moment only by Hurricane Katrina. It was also the biggest ever Atlantic hurricane as measured by its width, spanning over 1,100 miles.
Sandy developed in the western Caribbean Sea on October 22nd, hit Kingston, Jamaica on October 24th and then moved on to Cuba. After Cuba it moved through the Bahamas and on October 29th moved towards New Jersey, just north of Atlantic City.
In Jamaica 70% of the population was left without any electricity and $100 million of damage was done. One person died. In Haiti at least 54 people were killed by flooding and 200,000 were made homeless; there were also food shortages. In Cuba 15,000 were made homeless and $2 billion of damage was done while 11 people died.
In the US, the whole of the eastern seaboard from Maine to Florida was affected. On October 29th New York was flooded causing havoc to subways, tunnels and streets, and electricity was cut all around the city. Total damage in the US was put at $65 billion. Since Sandy was expected to arrive in the US around Halloween, Jim Cisco of the Hydrometeorological Prediction Center coined the name “Frankenstorm” but the media quickly changed this to “Superstorm”.
Over 5,000 commercial flights scheduled for October 28th and 29th were canceled while the US Air force and National Guard put over 45,000 personnel on standby for emergency duties.
Hurricane Sandy Insurance Claims
On February 28th 2013, the IRS published a notice allowing taxpayers affected in some areas to postpone their time for making an election to deduct losses in the preceding tax year, but only until October 15th 2013. This applied to “federally declared disaster areas” in Connecticut, Delaware, District of Columbia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, or West Virginia resulting from Hurricane Sandy.
A taxpayer is an “affected taxpayer” if the taxpayer sustained a loss directly attributable to Hurricane Sand; the loss occurred in one of the areas mentioned in the preceding paragraph – regardless of whether the taxpayer’s principal place of business or residence was or is elsewhere -, and the deadline for the election for that loss under section 165 (i) would have been before October 15th 2013.
That notice (2013 – 21) also clarifies the fact that affected taxpayers are not affected taxpayers for any other relief purposes provided by the IRS unless that taxpayer qualifies separately as an affected taxpayer under any other IRS issued guidance.
In short, if a taxpayer wishes to make an election to deduct losses for Hurricane Sandy claims under section 165 (i) in the preceding tax year and is eligible to do so, then he should do it before Oct 15, 2013.