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Damaged by Hurricane Sandy? Get the Refund You Deserve

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Taxpayers who are victims of Hurricane Sandy have the opportunity of claiming unreimbursed disaster-related casualty losses on their federal tax returns by filing Form 4684 Casualties and Thefts. The loss may be deducted on either the upcoming 2012 return or on an original or amended 2011 return. Claiming the loss on a 2011 return should result in an earlier refund. However in some cases waiting to claim the loss on the 2012 return may result in a greater tax saving, depending on your personal income tax situation.

The deductible loss is calculated by starting with the lesser of:

  1. Adjusted cost basis (original purchase price plus improvements), or
  2. Difference between the fair market value before and after the hurricane,                                             (alternatively the cost of repairing and restoring the home to its original value)

Ten percent of the taxpayer’s Adjusted Gross Income (AGI) is then deducted from the loss to arrive at the deductible amount. To illustrate, let’s assume John’s house was damaged in the storm with the following details:

Cost of house (in 1950)                                                      $10,000

Improvements                                                                   $150,000

Fair Market Value before the Hurricane                                $500,000

Fair Market Value after the Hurricane                                  $200,000

John’s Adjusted Gross Income                                            $100,000

John may only deduct the lesser of his adjusted basis of $160,000 ($10,000 purchase price plus $150,000 of improvements) or the change in fair market value of $300,000 (original fair market value of $500,000 minus $200,000 fair market value after the storm), which leaves him with only a $160,000 loss before deducting another $10,000 (10% of his AGI of $100,000) to arrive at a deductible loss of $150,000.

To view Form 4684, click here:  IRS Casualty Loss Form.  If you would like assistance with amending your 2011 tax return and /or assessing your casualty deduction please contact one of Urbach & Avraham’s tax consultants at 732-777-1158.

Damaged by Hurricane Sandy? Let Your Employer Know

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The IRS has alerted employers and other taxpayers that because Hurricane Sandy is designated as a qualified disaster for federal tax purposes, qualified disaster relief payments made to individuals by their employer can be excluded from taxable income. Qualified disaster relief payments include:

  • Amounts to cover necessary personal, family, living or funeral expenses that were not covered by insurance
  • Expenses to repair or rehabilitate personal residences or repair or replace the contents to the extent that they were not covered by insurance

Another result of the Qualified Disaster status is that employer-sponsored private foundations may provide disaster relief to employee-victims without affecting their tax-exempt status.

NJ Offers Jobs to Unemployed to Rebuild New Jersey

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If you are unemployed and would like to help rebuild New Jersey, this opportunity may be for you. New Jersey Department of Labor and Workforce Development  will be providing temporary jobs to unemployed residents through local government agencies involved in restoring public land and infrastructure. This plan essentially kills two birds with one stone; helping to rebuild New Jersey while putting much needed money into the pockets of out-of-work residents. Interested job seekers should report to local One-Stop Career Centers. They may also send e-mails to sandyhelp@dol.state.nj.us, log onto JobsforJersey, or call 1-877-682-6238.

IRS Offers Relief to Victims of Hurricane Sandy

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In the aftermath of Hurricane Sandy, the IRS have taken action to aid those affected by the storm. It has postponed various tax filing and payment deadlines that occurred starting in late October to February 1, 2013. These include:

  • Fourth quarter individual estimated tax payment
  • Payroll and excise tax returns
  • Tax-exempt organizations required to file Form 990 with a deadline between October 31, 2012 and January 31, 2013

In addition, the IRS is waiving failure-to-deposit penalties for federal payroll and excise tax deposits normally due on or after the disaster area start date. Taxpayers now have until November 26, 2012 to remit and avoid penalties.

Thus far, IRS filing and payment relief applies to Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean, Somerset, and Union counties in New Jersey. To view included counties in New York and Connecticut or for more information click here: IRS Tax Relief for NJ, NY & CT Hurricane Sandy Victims

Medical Practice adding a Co-shareholder? Caution!

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If you are considering the addition of a co-shareholder to your medical or other professional practice, it may not be as simple as you think. While you may not mind sharing the profits with the new partner, allowing him to have input on business decisions affecting your practice may be quite another matter. As a result of a New Jersey statute long overdue for an amendment, you may be forced to hand over the controls to your new partner.

The law governing professional service corporations (N.J.S. 14A:17-6) specifies that where an entity has two shareholders, both “shall be” the directors. The terms of the statute appear to require that not only must the shareholder be a second director, but that he becomes a “minority partner” as well, which means that he will have half of the control regardless of his percentage of shareholdings. To illustrate, let’s assume you add John Smith as a 10% shareholder of your practice. He will be entitled to a 50% say in your practice’s business decisions, regardless of the fact that he only gets 10% of profits. [Read more…] about Medical Practice adding a Co-shareholder? Caution!