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Ask The Tax Editor, August 21: Tax Help For Disaster Victims

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four tax questions from readers on tax breaks for victims of hurricanes, tornadoes, wildfires,and other federally declared disasters. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Extended tax relief for an uninsured car

Question: I live in the Midwest, and my car was totaled by a tornado earlier this year. I didn't have insurance. Can I deduct the damage to my car on my Form 1040?

Joy Taylor: Yes, you should be able to. Individuals can deduct personal casualty losses that are not reimbursed by insurance to the extent those uninsured losses are attributable to federally declared disasters which affect a wide area. Your loss is equal to the smaller of the damaged property's adjusted basis or decline in value, less any insurance proceeds you receive or expect to receive.

Before the Senate left for its August recess, it approved a House-passed bill that extends tax relief that was given to victims of disasters that occurred in 2020 to mid-2025. The legislation applies to disasters beginning before January 1, 2027. We expect President Trump to sign this bill within the next few weeks.

It allows individuals to deduct uninsured personal losses in excess of a $500 threshold without regard to the offset —10% of adjusted gross income (AGI) — that generally applies. This tax break is available for taxpayers who claim the standard deduction and filers who itemize on Schedule A. The IRS refers to these losses as "qualified disaster losses."

2. Deducting disaster losses in a prior year

Question: My home suffered damage in a federally declared disaster a couple of months ago. I heard I can deduct the loss on my 2025 Form 1040, even though the disaster occurred in 2026. Is this true?

Joy Taylor: Yes. Individuals can opt to take a loss for the disaster year or the year immediately preceding the disaster. Since the disaster damaged your home this year, you can claim the loss on your 2026 return or your 2025 return, which gives you flexibility to claim the loss in the year that delivers the greatest benefit.

If you decide to claim it for 2025 and you have already filed your 2025 return, you can amend your tax return by filing Form 1040-X. Note: For this purpose, the filing due date for a 2025 amended return is six months after the normal due date for filing your return (without extensions) for the year in which the loss took place. So for 2026 disaster losses, you would need to file an amended 2025 return by October 15, 2027.

3. IRS safe harbors for calculating the disaster loss

Question: A wildfire damaged my home and lots of personal items earlier this year. Does the IRS provide any help for taxpayers who are trying to figure out what losses they can deduct on their Form 1040?

Joy Taylor: Yes. Computing the amount of loss to your home or belongings can be difficult. Luckily, the IRS has multiple safe harbors to help you with this calculation.

For example, one method lets a homeowner with casualty losses of $20,000 or less take the lesser of two repair estimates to determine the decrease in the home's value. Another has a table to compute the replacement cost of personal belongings destroyed in the federally declared disaster.

You can find out more about these safe harbors in IRS Publication 547 and IRS Revenue Procedure 2018-08.

4. Lost tax returns and calling the IRS

Question: My house was destroyed in a wildfire. I lost all of my prior-year tax returns. How can I replace them?

Joy Taylor: Individuals who lost prior-year tax returns in a hurricane, fire or other disaster have multiple ways to get a tax transcript, which is a summary of key tax information.

You can view, print or download your tax transcript in your IRS individual online account if you have one.
You can call the IRS’s automated phone transcript line at 800-908-9946 and follow the prompts or mail Form 4506-T to the IRS.
You can get a paper copy of your full return by mailing Form 4506 to the IRS, but that would take much longer.

The IRS has a dedicated phone line for disaster-related questions. That number is 866-562-5227. The agency also has FAQs for disaster victims on its website.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not, and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.