Katrina Grants may have IRS come calling (1 Viewer)

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They're taxable if loss claimed in '05
Friday, November 24, 2006
By Bill Walsh

WASHINGTON -- Louisiana hurricane victims lining up for government Road Home grants to rebuild their homes might be surprised to discover that, for some at least, there is a toll booth on the road to recovery.

The grants, which are averaging about $60,000, are not directly taxable. But the Internal Revenue Service says Road Home recipients who claimed a storm loss on their taxes last year should count the grants as income on their federal tax returns this year. That means some people will be thrown into lofty tax brackets they never dreamed of -- and pay more taxes too.

http://www.nola.com/news/t-p/frontpage/index.ssf?/base/news-7/116435104531380.xml&coll=1
 

staphory

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They're taxable if loss claimed in '05
Friday, November 24, 2006
By Bill Walsh

WASHINGTON -- Louisiana hurricane victims lining up for government Road Home grants to rebuild their homes might be surprised to discover that, for some at least, there is a toll booth on the road to recovery.

The grants, which are averaging about $60,000, are not directly taxable. But the Internal Revenue Service says Road Home recipients who claimed a storm loss on their taxes last year should count the grants as income on their federal tax returns this year. That means some people will be thrown into lofty tax brackets they never dreamed of -- and pay more taxes too.

http://www.nola.com/news/t-p/frontpage/index.ssf?/base/news-7/116435104531380.xml&coll=1
I heard about this when I was home in August. I knew some folks that had damage but repaired it themselves rather than getting one of those grants. Seems some learned a nasty lesson from a previous storm.
 

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