Entering a 2017 Hurricane Casualty Losses on the 2016 Return

Yesterday TaxSlayer Pro released a 2016 Federal Individual Update that will allow qualified individuals in designated federal disaster areas impacted by Hurricanes Harvey, Irma and Maria to carry back to their 2016 tax return any qualified disaster-related personal casualty losses. This election to carry back a casualty loss can be made on the 2016 tax return if the 2016 return has not yet been filed or it can be made by amending a previously filed 2016 tax return. However, the election to carry back the qualified disaster-related personal casualty loss must be made by October 15, 2018. Otherwise, the qualified disaster-related personal casualty loss would have to be taken in the year of the loss, which will be the 2017 tax return.

Primarily this provision impacts taxpayers that reside in Florida, Georgia and Texas, but may impact certain residents of Louisiana, South Carolina and Puerto Rico. Under the Disaster Tax Relief Act, the 10% AGI limitation requirement was eliminated for qualified disaster-related personal casualty losses caused by these hurricanes, and the $100 per-casualty floor was increased to $500. However, taxpayers that do not itemize can still take advantage of any qualified disaster-related casualty losses by adding any loss to their standard deduction.

Recently the IRS revised the 2016 Form 4684 – Casualties and Thefts, and its 2016 Form 4684 Instructions which should be reviewed before electing to carry these disaster-related personal casualty losses on your 2016 tax returns. Today, the IRS released the revised 2017 Form 4684, and TaxSlayer Pro will be updating the 2017 program shortly to reflect the revised 2017 Form 4684, (which is similar to the 2016 revised Form 4684).  Once the 2017 information becomes available we will post it on this blog and also add it to the Pro Support Knowledgebase.

For more information on entering these hurricane-related casualty losses in TaxSlayer Pro on a 2016 tax return or amending a 2016 tax return, check out the Knowledgebase article on Hurricane Related Casualty Loss – Carrying Back to 2016.

Finally, you are not currently able to electronically file a 2016 return with these hurricane-related casualty losses and any 2016 original returns will need to be mailed (as well as any amended 2016 return).