A tax advantaged regular savings account or money market account for catastrophe losses or home self insurance.
A "Catastrophe Savings Account" is a tax advantaged regular savings account or money market account established after January 1, 2015 by a Mississippi income taxpayer, to assist with post catastrophe losses, or to self insure all or a portion of one's home.
The account must be labeled as a "Catastrophe Savings Account" in order to qualify as one.
Catastrophe savings must be segregated into a new, separate savings or money market account and be labeled as a "Catastrophe Savings Account". You must designate all monies in this account for this purpose.
A Mississippi income taxpayer may establish only one catastrophe savings account and shall specify that the purpose of the account is to cover the aggregate amount of insurance policy deductibles and other uninsured portions of risks of loss from a hurricane, flood, windstorm or other catastrophic event. You may continue to add to your account so long as it does not exceed the maximums set forth below.
The money in a Catastrophe Savings Account may be used:
- To pay an insurance deductible under an insurance policy that covers the taxpayer's legal residence in Mississippi, if that policy covers hurricane, flood, windstorm or other "Catastrophic Event" damage
- To pay for "Catastrophic Event" damage to the taxpayer's legal residence in Mississippi that is not covered by the policy of insurance that covers the taxpayer's legal residence for such damage after the deductible under such policy has been paid.
- To pay self-insured losses for the taxpayer's legal residence from a hurricane, flood, windstorm, or other "Catastrophic Event".
"Catastrophic Event" means windstorms, cyclones, earthquakes, hurricanes, ice storms, tornadoes, high winds, flood, hail and force majeure. The term "Catastrophic Event" also includes any event or occurrence for which a Presidential declaration of disaster, or declaration of disaster by the Governor, is issued.
First, you'll already have money when you need it to pay for the above described deductibles or damage from a Catastrophic Event.
Second, you can get break on your Mississippi income taxes.
The amounts contributed to a Catastrophe Savings Account, interest income earned on a Catastrophe Savings Account, and distributions from a Catastrophe Savings Account are excluded from the Mississippi taxable gross income of the account holder.
also, a Catastrophe Savings Account is not subject to attachment, levy, garnishment, or legal process in Mississippi, provided that no funds in an account are derived from or the result of a fraudulent conveyance making contributions to the account.
No. Catastrophe Savings Account apply only to your principle residence in Mississippi.
If your qualified insurance deductible is less than or equal to $1,000, then the total amount that may be contributed to a Catastrophe Savings Account can't be more than $2,000.
If your qualified insurance deductible is greater than $1,000, then the total amount that may be contributed to a Catastrophe Savings Account will be $15,000 or twice the amount of the deductible, whichever is less.
If you are self-insured for all or any part of your insurance policy, and can't, or choose not to obtain insurance on your legal residence, then the total amount that may be contributed to a Catastrophe Savings Account will be the lesser of $350,000 or the value of your legal residence.
Contributions to a Catastrophe Savings Account can be made all at once or over multiple years until the maximum limitation amount has been met
If a Mississippi income taxpayer contributes in excess of the limits, the taxpayer shall withdraw the amount of the excess contributions and include that amount in the Mississippi taxable gross income of the taxpayer in the year of withdrawal.
No, but only if the amount of the distribution is used to pay qualified Catastrophe expenses.
Yes.
If the aggregate distributions exceed the qualified Catastrophe expenses during the taxable year, the amount otherwise included in the Mississippi taxable gross income of the taxpayer shall be reduced by the amount of the distributions for qualified Catastrophe expenses.
The tax paid that is attributable to a taxable distribution shall be increased by 2.5% of the amount of the distribution that is includable in the taxable gross income of the taxpayer, This additional tax does not apply if:
- the taxpayer no longer owns a legal residence that qualifies for homestead exemption; or
- The distribution is from a Catastrophe Savings Account conforming with this law and is made on or after the date on which the taxpayer attains the age of 70 years.