PARSIPPANY, NJ - 27 September, 2005 -

Suffering a loss from a hurricane, tornado or any other type of unexpected disaster can be devastating to both family and property. In order to ensure that taxpayers accurately declare their losses, the tax professionals at Jackson Hewitt Tax Service(r) (NYSE: JTX) provide important information to assess property damage, file tax return amendments and identify commonly overlooked loss claim items. Assess the Damage Once it is safe to return to your damaged property, the process of assessing your damage, alone or with your insurer, should begin. The following information will help disaster claimants accurately record and claim their damage: Document the damage to your property with photographs or video. Also photograph any repairs made to the damage and keep receipts for any repairs or clean-up work. File a timely insurance claim for reimbursement of the loss. If you do not file an insurance claim, the IRS may limit your eligible casualty loss to the amount that is not normally covered by your insurance, such as the amount of your insurance deductible. Spend your insurance reimbursement wisely. Usually, if your insurance reimbursement exceeds your basis (generally, the original purchase price plus any improvements and minus any depreciation) in the damaged, destroyed or lost property, and you replace those assets within two years with property that costs at least as much as your reimbursement, the amount of your reimbursement that exceeds your basis will not be taxable. However, if your primary home is in an area that the President has declared a disaster area, you have four years to replace your primary home and its contents if they were damaged or destroyed due to the disaster. Keep track of payments you receive. Payments you receive may be included in or excluded from income depending on whether restrictions were imposed on how you spend the money, or if you received the payments as part of relief provided to individuals in an area the President has declared as a disaster area. For example, the $2,000 debit cards distributed to Hurricane Katrina victims by the American Red Cross and the Federal Emergency Management Agency (FEMA) are tax-free and are not taxable as income. Gifts from individuals or charities to help you with food, shelter and clothing are not considered taxable income. However if they are provided to replace your lost items, you may need to adjust your allowed casualty loss. Tax Return Amendments Taxpayers residing in Presidentially declared disaster areas can choose which year to claim losses incurred. Casualty losses can be claimed on a tax return for the year the disaster happened or the prior year return can be amended in order to get a refund for the loss sooner, rather than waiting until the following year. "Taxpayers affected by Hurricane Katrina have until April 17, 2006 to amend their 2004 tax returns and claim any losses incurred," said Mark Steber, Vice President of Tax Resources at Jackson Hewitt Tax Service. "Taxpayers need to be aware of the importance in comparing one's specific tax situation and adjusted gross income for both 2004 and 2005 to determine the financial advantage to claim the loss in one year rather than the other." Prepare for Future Disasters Since natural disasters can occur at any time, it is important for those in vulnerable areas to keep track of certain information should they need to report a casualty loss on their tax return. Here are some tips to keep in mind: Determine if you have the appropriate insurance for your home and car. Keep documents to help determine the original purchase price for your home and other items, such as a HUD-1 Settlement Statement, bill of sale and receipts. Document your property and its contents through photos, lists and receipts. Keep important documents in a safe place, such as a safety deposit box or fireproof safe. Also, as backup, provide copies to a trusted family member located in an area that is not typically vulnerable to natural disasters. When it comes to casualty loss, preparation is key, adds Steber. "Taxpayers should take an inventory of their personal belongings and property," said Steber. "Having a detailed list, that includes some of the most commonly overlooked loss claim items, such as food, wall fixtures, refrigerated medication, holiday decorations, eyeglasses, hearing aids and clothing, as well as supporting documentation, will make the task of filing for a casualty loss much simpler." For more information on casualty loss and a comprehensive item checklist, visit www.jacksonhewitt.com.

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