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Did you unfortunately suffer from flood losses last spring? The National Disaster Relief Act of 2008 changed some of the tax rules pertaining to losses resulting from federally declared disasters, such as the flooding in Cass and Clay counties in 2009. The law, which is effective for losses attributable to disasters federally declared in taxable years beginning after December 31, 2007, and before January 1, 2010, provides the following:

  • Allows all taxpayers, not just those who itemize, to claim the net disaster loss deduction regardless of the taxpayer’s adjusted gross income
  • Removes the 10 percent of adjusted gross income limitation for net disaster losses
  • Provides a 5-year net operating loss (NOL) carryback for qualified disaster losses
  • Changes the amount by which all individual taxpayers must reduce their personal casualty or theft losses for each casualty or theft event from $100 to $500. This applies to deductions claimed in 2009. The reduction amount returns to $100 for taxable years beginning after December 31, 2009
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