Helping Handbook

Tambien disponible en español (744K PDF)

PERSONAL FINANCES

Because of the fires, I may not be able to pay off some or all of my bills on time or make mortgage or other loan payments, especially in the short term. What should I do?

You should immediately contact creditors, financial institutions, and any other parties to whom you owe or will owe money in the short term, discuss your specific circumstances with each creditor, and request that payments be reduced or delayed while you attempt to work things out. In all events, you should follow up any conversation with a letter that reiterates the substance of your conversation and any agreements reached during the conversation.

Additionally, after past disasters, certain federal programs (such as student loan programs) have granted limited forbearance to borrowers affected by the disaster. Contact your lenders to see whether such relief has been, or will be, granted as a result of the Southern California wildfires.

Further, you might want to contact the National Foundation for Credit Counseling at (800) 388-2227, or on the web at www.nfcc.org, to obtain credit counseling services.

As a result of the fires, my credit card, ATM card, and/or checks and related statements were destroyed. What should I do?

To replace credit cards, debit cards, and/or checkbooks, contact your financial institution. Most banks and credit card companies have toll-free numbers to report lost or stolen cards. If you need replacement checks or bank statements but have no identification, you should go to the branch where you opened the account. For your bank’s contact information or information on how to gain access to your funds, you may call the Federal Deposit Insurance Corporation’s (FDIC) toll-free, 24-hour hotline: (877) ASK-FDIC or (877) 275-3342.

I do not have a permanent address at this time. Can I still receive replacement documents or monthly account statements?

If you are no longer at your home, you can have replacement documents sent to you as long as you have a fixed address. To file a forwarding request, you can go to the U.S. Postal Service website, www.usps.gov, visit any post office, or call (800) ASK-USPS.

What happens if my bank has lost my records?

Be assured that banks are required to have extensive contingency plans for all types of disruptions to operations, including natural disasters. Banks should have back-up systems of records and other built-in duplications that are housed in safe locations so that financial records can be reconstructed and restored.

The local banks (or banks at which I do not have an account) will not cash my checks or let me withdraw money from teller stations; what can I do?

If you do not have an account relationship with the bank, it may be concerned about whether there are sufficient funds in your account. Ask the local bank to call your bank to determine your account balance. You can also establish a new account with the local bank where you have relocated and then contact your hometown bank to wire funds from your existing account to the new account. If you do not have the documents traditionally required to open a new account, such as a driver’s license, you can ask a local bank if it has instituted any special programs for victims of the fires or you can call the FDIC hotline for more information: (877) ASK-FDIC or (877) 275-3342.

How can I deposit or cash any insurance checks that I may receive?

If you receive checks, such as insurance payments, your bank should be able to receive the check or cash the check for you, even if your bank or local branch has been affected by the fires. If your bank or local branch is still not ready to receive checks, it is anticipated that arrangements will be made with neighboring banks to help you. Alternatively, you can contact another bank and ask about establishing a new account so that you can deposit or cash your checks through a new account.

If my local bank was destroyed, is my money still insured?

Yes, your money is still insured by the Federal Deposit Insurance Corporation. Deposits with a FDIC-insured bank or savings institution will continue to be protected up to $100,000.

What about the contents of my safe deposit box? Does FDIC insurance cover safe deposit boxes?

Deposit insurance does not cover safe deposit boxes. Most safe deposit boxes are held in the banks’ vaults, which are fireproof and waterproof. If possible, contact the branch or office where your box was located to find out the condition of your box.

My regular direct deposit is not showing up in my account, and I need money. How can I clear this up with the bank?

Sometimes there are delays in the processing of transactions, including direct deposits, as banks activate back-up plans. The banks will process the transactions once these back-up plans are implemented and your direct deposit may be among the transactions waiting to be processed. You should contact your bank to ask about your pending direct deposit. You can also contact the individual or company that is making the deposit to ask whether it has any information.

If my ATM card does not work, what should I do?

If your ATM card will not work, it is probably because your bank’s verification system is not working. You may consider other options, such as cashing a check in the area where you are located or using a credit card. You may also contact one of the emergency service organizations, such as FEMA or the Red Cross, and request assistance.

I need cash immediately and my ATM card is lost/stolen/destroyed. Will the bank let me get cash?

You should call your financial institution to ask how you can access your account without an ATM card. Your bank may be able to wire transfer money to another financial institution that is convenient to you and can arrange to send you a replacement ATM card (if you have an address to receive a new card).

I have access to my bank account through an ATM, but the amount of money I can withdraw each day is limited. How can I withdraw more than the daily limit?

Please talk to your bank about increasing your daily ATM withdrawal limit.

I have my bills set up to automatically deduct payments from my account. I do not have enough money to cover those deductions. How do I go about stopping these payments?

By law, you must call or write your bank requesting a stop on an automated debit at least three business days before the scheduled debit. If you make an oral request, the bank may require you to confirm it in writing within 14 days of your call. Because of the fires, your bank may be willing to waive the three-business-day period. Notify your bank of any errors within 60 days of the statement showing the error.

Can I file for bankruptcy as a result of the wildfires?

The wildfires have not changed the requirements for filing for bankruptcy, so the answer really depends on the circumstances of your personal situation. By way of background, bankruptcy generally allows you to get rid of most of your debts, but it also requires you to use almost all of your assets (bank accounts, cars, stocks, etc.) to pay off as many (and as much of) of your debts as possible. Other bankruptcy options currently include keeping your assets but rescheduling your debts to pay them off over time. Although a bankruptcy filing can provide an individual with certain benefits, it is not without its costs: a bankruptcy filing will affect your credit score, may make it more difficult to get a mortgage or other loans, and usually does not wipe out fines, certain taxes, and most student loan obligations.

Bankruptcy is a serious decision that should only be made after careful consideration, preferably with the help of a lawyer qualified to give advice concerning bankruptcy issues. If you want to contact an attorney about bankruptcy and are unsure whom to contact, State Bar–certified lawyer referral services are listed in the “Lawyer Referral Services & Legal Aid” section.

Am I entitled to a modification/reduction of my child support obligations because of my losses due to the wildfires?

Possibly. An uninsured catastrophic loss may be a basis for requesting a reduction in the child support you pay or for requesting an increase in the child support you receive. The change in your child support is not automatic. You must file a motion to request it. If you have an attorney for your child support case, you should contact him or her immediately. If you do not have an attorney, you may obtain assistance through the Office of the Family Law Facilitator. The Office of the Family Law Facilitator can be reached at the following local contact information:

Although the information provided here is based on the general tax provisions applicable to presidentially declared disasters such as the wildfires, it is possible that more specific administrative or legislative guidance will be released in the future that alters the tax provisions described here. Accordingly, you are strongly urged to obtain updated information by consulting your accountant or other tax advisor, checking the IRS website at www.irs.gov, or calling the IRS at (866) 562-5227 (Monday-Friday, 7:00 a.m. – 10:00 p.m. local time).

Can I defer paying taxes or reduce my taxes as a result of the wildfires?

In connection with certain disasters in the past, the IRS has extended deadlines for affected taxpayers in the disaster area to file certain tax returns or to make certain tax payments (including estimated tax payments), and has waived interest or late filing or late payment penalties that would otherwise apply to such tax returns or payments. Although the counties of Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura have been declared disaster areas by President Bush, the IRS has not yet announced (as of the date of this handbook) whether it will offer such extensions and waivers for victims of wildfires. Accordingly, you are strongly urged to obtain updated information by consulting your accountant or other tax advisor, checking the IRS website at www.irs.gov, or calling the IRS at (866) 562-5227 (Monday-Friday, 7:00 a.m. – 10:00 p.m. local time). For more information, go to www.ftb.ca.gov/individuals/disaster.html.

Is there any additional tax relief for which I might qualify if my property has been damaged?

With respect to property taxes on real property damaged or destroyed in the wildfires, see “Other Housing Related Issues.”

For federal income tax purposes, the IRS allows certain deductions for property damaged or destroyed due to casualties, such as the wildfires. The amount of your deduction depends on the nature of your property (personal-use versus business-use) and, in the case of business-use property, whether it is completely destroyed.

With respect to casualty losses of personal-use property, you may deduct such losses but must reduce such losses by any insurance or other reimbursement you receive or expect to receive, further reduce each loss by $100, and then further reduce your total casualty losses of personal-use property for the year by 10% of your adjusted gross income.

With respect to casualty losses of business or income-producing property (such as rental property), the amount you may deduct depends on whether the property is completely destroyed. If it is not completely destroyed, first determine: (1) the decrease in the fair market value of the property as a result of the casualty, and (2) your adjusted tax basis in the property, and then, from the smaller of these two amounts, subtract any insurance or other reimbursement you received or expect to receive. Conversely,if the property is completely destroyed, your loss is your adjusted basis in the property, reduced by any salvage value and any insurance or other reimbursement you received or expect to receive.

If your property is covered by insurance, file a timely insurance claim for reimbursement of the loss. Otherwise, you may not be able to deduct the amount of the loss for which you failed to claim coverage. (This does not apply to any portion of the loss not covered by insurance.)

You have the option of claiming fire-related casualty losses on your federal income tax return for either 2007 or 2006. Claiming such casualty losses on an amended return for 2006 may qualify you for a refund now, but waiting to claim the losses on your 2007 return could result in a greater tax saving, depending on other income factors. If you want to claim such casualty losses on an amended return for 2006, you should write “Southern CA Wildfires 2007” in red ink at the top of the amended return.

For more information on casualty losses, please refer to IRS Publication 2194, “Disaster Losses Kit for Individuals – Help From the IRS,” or IRS Publication 2194B, “Disaster Losses Kit for Business – Help from the IRS.” These publications contain information about IRS tax services, forms and publications that will assist you with your loss. In addition, you may also need the following forms and publications:

You may download and print IRS forms and publications from the IRS website at www.irs.gov or call the IRS at (800) 829-3676 to order free forms and publications. Additionally, you may want to consult with your accountant or other tax advisor.

May I take a deduction on my California state income taxes for my personal property that has been lost, damaged, or destroyed?

California law generally is similar to federal law for casualties and disasters. The Franchise Tax Board will allow victims to receive additional tax refunds this year by immediately reporting their disaster losses through amended 2006 returns. Please refer to FTB Publication 1034 for more information on claiming disaster losses. You can download this publication at the Franchise Tax Board’s website at www.ftb.ca.gov or order one by calling (800) 852-5711. In order to expedite your refund, you should write “Southern CA Wildfires 2007” in red ink at the top of side 1 of the return. If you e-file your tax return, you should follow the software instructions to enter the above information when prompted.

Taxpayers whose losses exceed their income may qualify for 100% carryover of any excess casualty loss to future taxable years. This will require the California Legislature to enact legislation adding the wildfires to the list of eligible disasters for such treatment. At the time of printing of this handbook, the Legislature had not yet enacted such legislation. For the latest information, please check the California Franchise Tax Board’s website at www.ftb.ca.gov or call (800) 338-0505.

Must I declare amounts of money received from my homeowners’ insurance company as income on my tax returns?

It depends. You may be able to offset proceeds from insurance relating to property damage against the adjusted basis of the damaged property. In that case, only the excess proceeds will be treated as taxable income, and you may be able to elect to defer recognition of that income if you use the proceeds to purchase similar property within a specified time period. If you receive insurance proceeds for a loss for which you have already claimed a casualty loss deduction, the insurance proceeds generally will be taxable to you in the year of receipt. Additional rules apply if the amount received exceeds the amount of the claimed deduction. The rules relating to insurance recoveries are complicated. You are strongly encouraged to consult a tax advisor when filing tax returns for periods during which you received insurance proceeds or for which you are electing to defer gain.

If I receive a grant from a federal or state program, charitable organization, or employer to cover medical, transportation, or temporary housing expenses, is it taxable?

Generally no. If you are in the areas declared a disaster due to the fire, you generally do not have to include any of the following receipts in gross income, unless the same expenses are also reimbursed to you through insurance or otherwise through:

Are other relief payments taxable?

Generally yes. You generally do have to include in gross income the following relief payments:

Where can I get more tax-related information?

Although the information provided here is based on the general tax provisions applicable to presidentially declared disasters such as the wildfires, it is possible that more specific administrative or legislative guidance will be released in the future that alters the tax provisions described here. Accordingly, you are strongly urged to obtain updated information by consulting your accountant or other tax advisor, checking the IRS website at www.irs.gov, or calling the IRS at (866) 562-5227 (Monday-Friday, 7:00 a.m. – 10:00 p.m. local time).