Tax code hurts struggling forest fire victims in NM

THE 2022 Calf Canyon/Hermits Peak Fire became the largest wildfire in New Mexico history, burning 298,000 acres, or 534 square miles, destroying over 903 structures.

Talking with friends who lost much in the fire, and then with my wife who prepares taxes for a living, I discovered an enormous injustice that needs to be corrected. Federal tax rules allow for the standard deduction — which most people take, especially filers with low or moderate income — because it is fairly high, at $25,900 for married filing jointly, and also add to that the casualty loss from the fire.

These deductions lower the taxable income. Many states allow you to itemize deductions on your state return, even if you take the standard deduction on your federal return. N.M. tax rules state that, if one takes the standard deduction with the feds, then one must also take the standard deduction with the state, but then there is no provision for casualty loss with the state. A real Catch-22.

Anyone reducing their taxes with the feds by taking the standard deduction and the casualty loss will get zero benefit in terms of reducing their taxable income due to fire loss on their state return. This is unacceptable and only adds insult to injury for those significantly affected by the fires.

With many fire victims still having received little or no compensation for their losses, the least we can do is help them out with a tax break. Perhaps just putting on the state tax return a valid FEMA claim number would allow someone to add their casualty loss, and thus also get a tax break from N.M. Given climate change, it seems prudent to make this simple change to help future citizens get some state tax relief from such disasters.

VICTOR LACERVA Santa Fe