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.
Finally,
if you have received a foreclosure notice from your lender,
or are unable to pay your monthly rent, you may be eligible
for assistance through FEMA’s Mortgage and Rental Assistance
program, which is designed to help renters and homeowners whose
homes are habitable but who may lose them because they are not
able to make their monthly mortgage or rental payments as a
result of a designated disaster such as the wildfires.
Am
I eligible for Mortgage and Rental Assistance?
To
be eligible for Mortgage and Rental Assistance you must show
that:
How
will I show that I am suffering from financial hardship directly
resulting from the disaster?
FEMA
defines financial hardship as (i) a loss of at least 20%
of your household pre-disaster income as a result of the disaster,
and (ii) a rental or mortgage payment that exceeds 25%
of your gross monthly post-disaster household income. You will
need to provide verifiable documentation of financial hardship
through documents such as check stubs, tax returns, bank statements,
layoff or termination letters, declarations from former employers,
a written lease that indicates your monthly rent, and/or a copy
of your mortgage.
How
will I show that I lived in my home before the disaster?
Documents
that can help establish your residency include utility bills
issued during the three month period prior to the disaster that
show your name and address, or a copy of your lease/mortgage
that verifies when you moved into your residence.
Do
I need to have an actual notice of eviction or foreclosure,
or are letters from my landlord or lender enough?
You
will need to have a notice of eviction or foreclosure from your
landlord or lender, or evidence that your landlord or lender
has taken formal legal steps to evict or foreclose. Letters
demanding payment or oral demands from your landlord or lender
are not sufficient.
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 may make it
more difficult to get a mortgage, and it 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:
Los
Angeles County:
Multiple numbers apply by region. Call (213) 974-5004 to assist
you in locating the applicable office, or search Los Angeles
Superior Court website at www.lasuperiorcourt.org/familylaw/sup-facilitator.htm
San
Bernardino County: (909) 387-3154
San Diego County: (619) 531-3234
Ventura County: (805) 654-2261
For
information on the family law division for the Riverside County
Superior Court, call (909) 955-1940 (option 5).
Can
I defer paying taxes or reduce my taxes as a result of the wildfires?
The
IRS extended certain deadlines for “affected taxpayers,”
defined as victims of the wildfires, those whose tax records
are located in the fire-affected areas and relief workers assisting
in the fire-affected areas. Such affected taxpayers will have
until December 29, 2003 to file tax returns or make tax
payments, including estimated tax payments, that have either
an original or extended due date falling within the period from
October 21, 2003 to December 29, 2003. The IRS will
not charge interest or late filing or late payment penalties
that would otherwise apply during these dates to returns or
payments subject to these extensions. This extension to file
and pay does not apply to information returns or to employment
and excise tax deposits.
To
qualify for such extensions, affected taxpayers should put “CA
Wildfires” in red ink at the top of the return. In the
case of Form 5500 only, filers should check Box D in Part 1
and attach a statement, following the form’s instructions.
If
you are located in one of the fire-affected areas, or are outside
such areas but were directly affected by the fires, and you
receive penalties for filing returns or paying taxes late, you
should contact the IRS at (800) 829-1040.
Additionally,
the State of California has granted taxpayers directly affected
by the wildfires tax relief that includes extensions of time
to make estimated tax payments and file tax returns, as well
as penalty relief. Individuals impacted by the fires who have
California tax returns or tax payments due on or after October 21,
2003, through December 29, 2003, have been granted an automatic
extension through December 29, 2003. Since the wildfires
occurred after the State of California’s October 15
extended filing due date, and the next estimated tax payment
is January 15, 2004, only taxpayers who file with a fiscal
year end should be affected by the extension period.
To
qualify for such extension, you should put “CA Wildfires”
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.
Is
there any additional tax relief for which I might qualify if
my property has been damaged?
With
regard to property taxes on real property damaged or destroyed
in the wildfires, see “Other Housing Related Issues”
at page 16. Beyond property taxes, affected taxpayers have the
option of claiming fire-related casualty losses on their federal
income tax return for either 2003 or 2002. Claiming the loss
on an amended return for 2002 may qualify you for a refund now,
but waiting to claim the loss on your 2003 return could result
in a greater tax saving, depending on other income factors.
By amending your 2002 return, you should be able to receive
your refund in a few weeks.
If
you are an affected taxpayer, you may deduct personal property
losses that are not covered by insurance or other reimbursements,
and you must subtract $100 for each casualty event and then
subtract ten percent of your adjusted gross income from your
total casualty losses for the year. For details on calculating
a casualty loss deduction, you should refer to IRS Publication
547, “Casualties, Disasters and Thefts” and IRS
Form 4684, “Casualties and Thefts.”
If
you want to claim the casualty loss on your 2002 return, you
should put “CA Wildfires” in red ink at the top
of the amended return so that the IRS can expedite the processing
of your refund.
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.
Please refer to the answer to the question entitled “May
I take a deduction on my federal income taxes for my personal
property that has been lost, damaged or destroyed?” and
“Disaster Loss” (FTB Pub. 1034) for more information.
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 put “CA Wildfires” 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 homeowner’s
insurance company as income on my tax returns?
In
general, the answer is “no.” Proceeds from your
homeowner’s insurance policy paid to replace or repair
your home are generally not taxable. You should consult with
your accountant or tax advisor with respect to your specific
circumstances.
Must
I declare amounts of money received from state or federal loans
as income on my tax returns?
In
general, the answer is “no.” Loans are generally
not considered to be income and therefore are not taxable. You
should consult with your accountant or tax advisor with respect
to your specific circumstances.
Must
I declare government grants received in connection with wildfire
relief as income on my tax returns?
In
general, the answer is “no.” You should consult
with your accountant or tax advisor with respect to your specific
circumstances.
Must
I declare donations (in cash or in kind) from charitable organizations
such as the Red Cross as income on my tax returns?
In
general, the answer is “no.” You should consult
with your accountant or tax advisor with respect to your specific
circumstances.
Where
can I get more tax-related information?
