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 - to read more tax articles.
Alto Pass chicago limos ..Employers often ask employees to designate the amount of tax... Read More
Once a year Canadian taxpayers are required, by law, to... Read More
So, you were pleasantly surprised to learn that you are... Read More
Q: I was contacted by the city tax collector to... Read More
All tax authorities to e-commerce transactions should investigate the record... Read More
The Sarbanes-Oxley Act, also called the Public Company Accounting Reform... Read More
Anyone who is closely related to an accountant knows that... Read More
1812The first attempt to impose an income tax on America... Read More
Ever wish that, as a business owner, you knew exactly... Read More
Excerpted from the new book, "How to Do Space Age... Read More
"Depreciation." For business owners, this word is the one most... Read More
No one likes paying tax. Everyone understands that tax is... Read More
As a small business owner, it's wise to familiarize yourself... Read More
We all love to criticize the IRS, don't we? And... Read More
Own residential rental properties? This article discusses how income from... Read More
For many business owners the answer to this quandary is... Read More
Reservists called to active duty and enlistees in the armed... Read More
All states also have their own tax system. Typically there... Read More
Beware of advertisements that claim to settle tax debts for... Read More
How about a Tax Tip?As we all know Taxes are... Read More
As a small business owner or self-employed person, one of... Read More
If your identity is stolen, your finances can quickly become... Read More
On June 3, 2005, the IRS released guidance on charitable... Read More
Newlyweds and the recently divorced should make sure that names... Read More
Whether helping the kids with a down payment on their... Read More
Alto Pass cool limo ..Marketing is a necessary expense in running practically any business... Read More
The Internal Revenue Service has certified the 2006 Toyota Highlander... Read More
Anyone who is closely related to an accountant knows that... Read More
Estate taxes. It's not enough to simply know they exist,... Read More
April 15th looms in front of most people every year... Read More
The United States is a nation of entrepreneurs. There are... Read More
It's a moment every person dreads. You pick up the... Read More
In elementary school, kids come up with creative excuses why... Read More
If you have recently started an Internet or home business,... Read More
One way to maximize your business profits is by reducing... Read More
Just image, you are a small manufacturing company, business has... Read More
The federal tax code is complex. This complexity generally arises... Read More
Excerpted from the new book, "How to Do Space Age... Read More
In the latest Star Wars episode, the evil empire executes... Read More
As your business grows, you are going to need help.... Read More
Strategic planning throughout the year results in a minimal tax... Read More
According to the IRS, taxpayers underpay their taxes by some... Read More
Assume a buyer in Pakistan downloads software from the Internet... Read More
While there are many equally valid reasons to incorporate, saving... Read More
If you are environmentally conscious and purchase a 2005 Ford... Read More
All states also have their own tax system. Typically there... Read More
It's that time again, the April 15 tax deadline is... Read More
It may not be high on the list of wedding... Read More
1812The first attempt to impose an income tax on America... Read More
Choosing the right tax preparer for your business is a... Read More
Tax |