Big Island and Changes in the 2018 Tax Law

Big Island and Changes in the 2018 Tax Law

I love the Big Island of Hawaii and am truly saddened to see the devastation wrought by the recent eruption of the Kilauea volcano. The very same volcanic force of nature that created one of the most beautiful paradise Islands on Earth is currently wreaking havoc on the Southeast Puna district of the island.  Big Island residents have lived with an active volcano for years now and will probably continue to do so for years to come. I personally have many friends who live on the Island and am happy to report that they are all safe. This event brought to my attention to the changes in 2018 Tax Law.

The eruption of the Kilauea volcano began on May 3rd 2018 and since then, flowing lava has destroyed more than two dozen homes and buildings. These losses will all hopefully be remunerated by insurance loss claims in short order. But until President Trump declared the Big Island a “Federal Disaster Area,” on Friday May 11th, these homeowners would not have been able to qualify for a “disaster loss” as a tax deduction on their 2018 tax returns!  The eruption of Kilauea now joins other disasters such as the 2017 hurricane Harvey and the California Wildfires as a Federal disaster area and because of this, residents affected by the eruption will be able to claim certain personal casualty losses as a deduction on their 2018 tax returns.

The Tax Cuts and Jobs act of 2017 (TCJA) made major changes to what taxpayers can claim as itemized deductions, especially where it comes to personal casualty and theft losses. These deductions that are made were for claims NOT covered by insurance or otherwise. For tax years 2018-2025, the personal casualty and theft loss is only available if the disaster is declared by the president under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Under this provision, a taxpayer will be able to claim a personal casualty loss as an itemized deduction on their taxes provided the loss is over $100 and meets the 10% of Adjusted Gross Income Limitations (AGI).

While the disaster on the Big Island may be thousands of miles away for most of us reading this post, it should serve as a wake-up call to all of us. Now that the deduction restrictions under the new tax law (TCJA) have dramatically increased, perhaps it is time for all of us to review our homeowner, earthquake, flood, fire and auto coverage to make sure that we are properly insured. Remember, it is always better to be safe than sorry.

Disclosures:

RHS Financial does not provide tax or insurance advice advice, please consult a qualified advisor for tax and insurance advice. This post is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by RHS Financial, LLC unless a client service agreement is in place. Please contact us at your earliest convenience with any questions regarding the content of this post. For actual results that are compared to an index, all material facts relevant to the comparison are disclosed herein and reflect the deduction of advisory fees, brokerage and other commissions and any other expenses paid by RHS Financial, LLC’s clients. An index is a hypothetical portfolio of securities representing a particular market or a segment of it used as indicator of the change in the securities market. Indexes are unmanaged, do not incur fees and expenses and cannot be invested in directly.

2024 Disclosures

RHS Financial is an SEC registered Investment Advisory Firm and distributes this presentation for informational purposes only. This presentation ( hitherto referred to as the presentation throughout this disclosure), blog post, infographic, slide deck or whatever form of informational modality the reader wishes to describe this as is provided for informational purposes only and should not be construed as investment advice in any way.

We believe the information, including that obtained from outside sources, to be correct, but we cannot and do not guarantee its accuracy in any way. RHS Financial uses information from outside sources to develop graphs, charts, infographics, etc. to enhance this presentation and while we believe the information from these outside sources, to be correct, we cannot and do not guarantee its accuracy in any way,

Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors who may be employees of but do not necessarily reflect the views of RHS Financial as a company. There can be no guarantee that developments will play out as forecasted. The information in this presentation is subject to change at any time without notice. This presentation contains “forward-looking statements" concerning activities, events or developments that RHS Financial expects or believes may occur in the future. These statements reflect assumptions and analyses made by RHS’s analysts and advisors based on their experience and perception of historical trends, current conditions, expected future developments, and other factors they believe are relevant. Because these forward-looking statements may be subject to risks and uncertainties beyond RHS Financials’ control, they are no guarantees of any future performance. Actual results or developments may differ materially, and readers are cautioned not to place undue reliance on the forward-looking statements. In a nutshell; these are our best guesses and please don’t assume they are fact.

Mentions of specific securities, investment products, investment indices, companies or industries should not be considered a recommendation or solicitation. Data and analysis does not represent the actual or expected future performance of any investment or investment product Index information is used to illustrate general asset class exposure, and not intended to represent performance of any investment product or strategy.

This post may contain references to third party copyrights, indexes, and trademarks, each of which is the property of its respective owner. Such owner is not affiliated with RHS Financial and does not sponsor, endorse or participate in the provision of any RHS’ services, or other financial products. Index information contained herein is derived from third parties and is proffered to you unaltered as we derived it from the third party.

RHS Financial, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where RHS Financial, LLC and its representatives are properly licensed or exempt from licensure. This presentation is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by RHS Financial, LLC unless a client service agreement is in place.

If the client is deemed suitable and agrees, RHS may employ leveraged strategies for these clients. Leverage attained through margin on a client’s account can add additional risk. While RHS tends to seek to improve return with theses strategies by applying leverage to less risky indexes, there is no guarantee that that RHS will lower risk or improve returns.

RHS Financial. 4171 24th St. Suite 101 San Francisco, CA 94114

Risley Sams

Risley Sams

Risley Sams, CFP®, MBA, CPWA®, is the Founder and President of RHS Financial. He is responsible for the future of the firm and the strategic services that we deliver.