Disaster mitigation. 

Qualified disaster mitigation payments are now nontaxable. Also, if you have a gain on the sale or other transfer of property to the government under a hazard mitigation program, you may not have to report the gain. For more information, see Qualified disaster mitigation payments and Sale of property under hazard mitigation program later under Disaster Area Losses.

If you received a qualified disaster mitigation payment or had a gain on the sale or other transfer of property to the government under a hazard mitigation program, previously included it in your income, and the time limit for amending your return for that year has not expired, you may be entitled to a refund of taxes paid. To claim any refund, individuals must file Form 1040X, Amended U.S. Individual Income Tax Return. Form 1040X must be filed within 3 years after the date you filed the original return or within 2 years after the date you paid the tax, whichever is later. A return filed early is considered filed on the due date.

Katrina Emergency Tax Relief Act of 2005. . This Act provides tax relief for persons affected by Hurricane Katrina. Under the Act, you may be entitled to other tax benefits not covered in this publication. For more details, see Publication 4492.

Extended replacement period for property located in the Hurricane Katrina disaster area. The replacement period for property in the Hurricane Katrina disaster area that was damaged, destroyed, or stolen after August 24, 2005, has been extended from 2 to 5 years. For more information, see Replacement Period later.

Limits on personal casualty or theft losses suspended. If your loss arose in the Hurricane Katrina disaster area, the $100 rule and 10% rule do not apply. For more information, see Deduction Limits later. Qualifying losses include losses from flooding or other casualty, and from theft, that arose in the Hurricane Katrina disaster area and were caused by Hurricane Katrina. The Hurricane Katrina disaster area includes the states of Alabama, Florida, Louisiana, and Mississippi.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

This publication explains the tax treatment of casualties, thefts, and losses on deposits. A casualty occurs when your property is damaged as a result of a disaster such as a storm, fire, car accident, or similar event. A theft occurs when someone steals your property. A loss on deposits occurs when your financial institution becomes insolvent or bankrupt.

This publication discusses the following topics.