Tax relief for disaster victims - KWWL - Eastern Iowa Breaking News, Weather, Closings

Tax relief for disaster victims

by Danielle Wagner

CEDAR RAPIDS (KWWL) Victims of last year's flooding, tornadoes and severe storms are eligible for some tax breaks.

The Heartland Disaster Tax Relief Act benefits ten states, including Iowa.

Scott Olson lost a business in the flood and three buildings he was partners in. He came to a tutorial Saturday to learn what disaster tax credits he might qualify for.

"I would rather have not seen a disaster that we had to have a bill like this, but the losses are so great or so substantial, anything that helps I think we need to be educated about and take advantage of," said Scott Olson of Cedar Rapids.

"We needed to make sure Iowa and other Midwest states were treated the same as the victims of Katrina," said U.S. Representative Dave Loebsack.

The $4.6 billion disaster tax assistance act is for individuals, businesses and communities.

Kristy Maitre with the IRS said most of the relief is geared to individuals. She said one of the most important elements to be aware of is the Earned Income Credit Provision.

"You can use your 2007 earned income to figure 2008 earned income tax credit. If 2008 earned income was less than 2007," said Kristy Maitre.

The act also waives limits on personal casualty or theft losses.

"That means you get to take the entire lost. It isn't reduced, but you must be able to itemize in order to take the loss," said Maitre.

For college students, Maitre said the Hope Credit and Lifetime Learning Credit are doubled.

If you took money out of your retirement plan to help with the rebuilding process, the penalty for taking that money out is waived.

Also, if you got Jumpstart money, it reduces what you can claim for your casualty loss.

Maitre said if you typically do your own taxes, visit www.irs.gov and read up on 547 and the Heartland Disaster Tax Act.

If you have trouble understanding it, she said you might want to consider using a professional tax preparer this year.

Reporter: Danielle Wagner

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