New York (October 31, 2012) – As East Coast residents and businesses begin recovering from the effects of Hurricane Sandy, CPAs are available to answer tax and personal finance questions they might face as they begin to rebuild their lives. Here’s a sampling of questions and answers typical after devastating storms.
Will I have to pay taxes on any insurance settlement?
In general, a personal insurance reimbursement does not become taxable income. Where business property is involved, however, there are special rules that must be followed. Depending on the type of business property, the rules will vary.
Can I claim a casualty loss deduction for amounts not covered by insurance?
Maybe. Special rules apply, and it’s best to discuss your specific situation with a CPA.
I lost important financial records in the storm. How can I reconstruct them?
You can get a copy of escrow papers from the real estate agent, title company or bank that handled your home purchase. Your tax preparer will have copies of previous returns. Want ads or Internet shopping sites can help with developing estimates of the fair market value of damaged or destroyed items. The American Institute of CPAs in conjunction with the American Red Cross and National Endowment for Financial Education has comprehensive, downloadable guides focused on financial issues of disaster recovery that can offer more advice.
I’ve never had to hire a contractor. Any tips on screening them?
Residents should get estimates from several licensed, bonded and reputable contractors. They should get contracts in writing and make periodic payments as work progresses, making the final payment after work is done. The AICPA’s disaster recovery guide offers more tips on this topic.
I’m a small business owner. Any tips on getting my business going again?
The AICPA offers several resources for businesses as they work to recover from disaster, including a helpful checklist owners can use to ensure they’re handling all necessary issues. You can find those resources on the AICPA’s business continuity and disaster recovery web site.