Hurricane Harvey has left us reeling, and many of us have lost nearly everything. There is quick financial relief available in several forms - let’s run those down:

  • Call your creditors and ask for a disaster related deferment or payment abatement; most auto loans are already granting a two month payment deferment as are most mortgage servicers
  • If you have suffered property damage, injury or evacuation expense - go to FEMA.gov and apply online for assistance. Some people can get a very quick advance. If you have to evacuate, registration can help you get assistance for temporary housing with direct payment from FEMA to your hotel or temporary landlord
  • If you didn’t have flood insurance, you may qualify for a low interest loan to rebuild - check with FEMA.gov or SBA.gov
  • You can amend your 2016 tax return (or file it, if you have not yet done so) and claim your Harvey losses against your 2016 income. More on that in a second

There are some things that are just not compensible –

  • Lost self-employment earnings or opportunities
  • Lost hourly wages in most cases
  • Lost food from lack of electricity or rising water

Right now, the most important things you can do for yourself are:

  1. Stay safe
  2. File insurance claims
  3. Register with FEMA.gov
  4. Photograph EVERYTHING you lost or that was damaged with your phone. EVERYTHING
  5. Get deferments and abatements from your creditors and billers

Aside from some quick, temporary assistance from FEMA or some partial assistance from a good insurance carrier, most of us will have to wait much longer than normal to get disaster claims or insurance claims processed and paid. After Hurricane Ike, I recall a couple of people in year three, waiting for insurance resolutions.

How can you recover something quickly? Amend your 2016 tax return. Here’s a quick rundown from the Wall Street Journal.

How this works

The tax code allows people in Federally declared disaster areas to claim their disaster losses on their immediately prior years’ tax return, whether personal, self-employed or business. Most folks have already filed their 2016 return, so an amendment is the way to go.

How do I amend?

If you’re brave enough to do this on your own, you need to prepare form 1040X and form 4684. If you have things to do, say, clean up, or talk to insurance adjusters, you could hire a tax preparer to assist you.

How long does this take?

Usually, five to seven weeks from the time you mail in your amended return. Amended returns have to be paper filed, so they have to be completed, printed out, signed and sent off. If you have provided direct deposit information, you’ll see the Treasury deposit before you get any IRS notification that your amendment has been processed.

What if I haven’t done my 2016 tax return yet?

You can add your disaster losses to your 2016 tax return and file it in the regular way. This means that you can e-file it, and a refund could be in your hands in just over two weeks.

There has to be a catch, right?

A few things:

  • You have to be eligible for a refund to receive cash money. If you have a balance due with the IRS, any increase in refund will be applied to that balance. If you paid in nothing, and you aren’t eligible for a refundable tax credit, you would also not have a refund coming
  • What you are getting back is the TAX on the income you had to write off because of your disaster losses. If you lost two cars, had no flood insurance on a $280,000 house and lost your possessions in the house and you earned a strong salary, you’d get back most everything you paid in for 2016. Most people would get back an amount between 10% and 30% of the losses. So, if you were the example above, with about $400,000 in losses and $50,000 in insurance reimbursements, your refund would be about $80,500.

What if I didn’t own a house?

You could still amend and claim your lost vehicles, personal possessions, furniture, clothing and so on.

Of course, we are ready starting September 5 to help you with these tax forms. If you’d like to learn more about it, click here. If you’d like to get started, click here.

Filing or amending your 2016 tax return is probably the fastest way to get some working cash to help you rebuild. We’re ready to help.

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