Natural Disaster Income Tax Credit Information for Taxpayers
What is the Natural Disaster Credit?
Per Public Act 100-0555, the Natural Disaster Income Tax Credit is a credit against individual or business income tax for the 2017 tax year. Public Act 100-0587 extended the credit to 2018 (fiscal filers - for tax years beginning prior to January 1, 2019). Each taxpayer is entitled to the Natural Disaster Credit if you own qualified real property that:
- is located in a county in Illinois that was declared a state disaster area due to flooding in 2017 or 2018,
- was damaged as a result of events related to this flooding, and
- did not and will not receive a Natural Disaster Homestead Exemption on property taxes as a result of this flooding for 2017 or 2018.
The amount of the credit is the lesser of $750 or the casualty loss deduction allowed with respect to the qualified real property under Section 165 of the Internal Revenue Code (IRC) (whether or not you actually claimed the casualty loss deduction on your federal income tax return). For this purpose, the amount of the casualty loss deduction under IRC Section 165 is determined without regard to either the 2% rule, the $100 rule, or the 10% rule. Generally, this is the amount of loss you determine for qualified real property on Line 9 or Line 27 of federal Form 4684, and does not include any amount reimbursed by insurance.
For more information, see FY 2018-17 and FY 2019-03.
How does a taxpayer qualify for the Natural Disaster Income Tax Credit?
A taxpayer qualifies for the credit if the following apply:
- the taxpayer’s damaged property is located in a county that was declared a state disaster area for flooding by the Governor in 2017 or 2018;
- the taxpayer did not and will not receive a Natural Disaster Homestead Exemption under Section 15-173 of the Property Tax Code with respect to the qualified real property as a result of the flood damage for 2017 or 2018;
- the taxpayer’s property is “qualified real property” as defined in “What is qualified real property?” and
- the taxpayer, if a business, is a “small business” as defined in “What is qualified real property?”.
What is qualified real property?
“Qualified real property” is defined as property that is your principal residence (not including personal property, such as furniture), or real property that is owned by a small business. The term “small business” is defined as a corporation or concern that employs fewer than 50 full-time employees, or has gross annual sales of less than $4 million, and is not dominant in its field.
Note: Qualified real property does not include property that is rented or leased. For example, a strip mall that leases units to businesses, or a house or an apartment that is rented by an individual are not qualified real property.
How do I apply for the credit?
To apply for the Natural Disaster Income Tax Credit, you must contact the County Supervisor of Assessments Office for your county. The contact person will have you:
- Complete the first two sections of the Natural Disaster Income Tax Credit Certificate.
- Provide a copy of federal Form 4684 verifying your casualty loss deduction or if you did not claim a casualty loss deduction on your federal income tax return (for example, because you did not itemize deductions), you should complete a pro-forma federal Form 4684 to determine the amount of the casualty loss deduction you would have been allowed. See IRS Publication 547, “Casualties, Disasters, and Thefts,” for more information.
- Provide one or more of the following as support for the damages incurred:
- copies of receipts for repair of damages resulting from of the flood
- copies of estimates made for the repair of damages resulting from the flood
- copies of insurance claims and receipts for reimbursement for damages incurred from the flood
Note: You must be able to prove that you incurred a casualty loss with respect to qualified real property, and establish the amount of that loss, in the manner required to obtain the casualty loss deduction under IRC Section 165. Your credit is equal to the lesser of $750 or the amount of loss you determine for the qualified real property on Line 9 or Line 27 of federal Form 4684.
If you meet all of the requirements, the contact person will provide you with the completed Natural Disaster Income Tax Credit Certificate.
Who do I contact to apply for the credit?
Contact the County Supervisor of Assessments office for the county in which your property is located.
How do I claim the credit on my Illinois income tax return?
You may electronically file your individual or business income tax return and claim the credit on the respective Schedule 1299. Make sure your certificate number is correct.
For individuals filing by paper:
- Attach your Natural Disaster Income Tax Credit Certificate on the top of your Form IL-1040, Illinois Individual Income Tax Return.
- Claim the credit on the Natural Disaster Credit Line on your Schedule 1299-C.
For businesses filing by paper:
- Attach your Natural Disaster Income Tax Credit Certificate on the top of your Illinois business income tax return.
- Claim the credit on the Natural Disaster Credit Line on your Schedule 1299-A or your 1299-D.
If filing by paper, mail your completed individual or business income tax return to:
Illinois Department of Revenue
PO Box 19018
Springfield IL 62794-9018
Note: The credit may not reduce your tax liability to less than zero. However, if the amount of your credit exceeds your tax liability, the excess amount may be carried forward for up to 5 years.