People wait to be rescued from their flooded homes after the area was inundated with flooding from Hurricane Harvey on August 28, 2017 in Houston, Texas. (Photo by Joe Raedle/Getty Images)

Over the weekend, Hurricane Harvey (now Tropical Storm Harvey) made landfall on the Texas coast. The impact was immediate and devastating. The storm dumped more than 24 inches of rain on Houston alone over a 24-hour period. Rainfall totals could reach more than 50 inches in Texas as the storm moves into Louisiana.

While the danger has not yet passed - and the full economic impact to the area is still unknown - there are steps that residents who are affected can take to recover some of the losses. If you are seeking information on immediate disaster relief or how to file a claim through the National Flood Insurance Program (NFIP), visit disasterassistance.gov.

Taxpayers who suffer economic loss due to a natural disaster like a hurricane can claim a casualty loss deduction on their federal income tax return. A casualty loss is defined as the damage, destruction or loss of your property from any sudden, unexpected, or unusual event. That includes a hurricane, flood, tornado, fire, earthquake or even volcanic eruption. A casualty loss does not include normal wear and tear or damage that happens over time, like termite damage.

To claim a casualty loss on your federal income tax return, you must itemize your deductions using Schedule A, Itemized Deductions (downloads as a pdf). You'll report the loss on line 20 of that form. You'll find it just below the section where you'd report charitable gifts:

IRS

Schedule A, line 20

So what's that number? You'll need to calculate the loss using federal form 4684, Casualties and Thefts (downloads as a pdf). On Page 1, at Part A of that form, you'll report any damage or loss of personal-use property like your home or car. On Page 2, at Part B of that form, you'll report any damage or loss of business or income-producing property.

If your property is personal-use property or is not completely destroyed, the amount of your loss is the lesser of your adjusted basis or the decrease in fair market value of your property because of the damage. For this purpose, your basis is typically what you paid for the item plus any long term improvements (like an addition).

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