With the storms that ripped through Bartow County, GA Wednesday night and the aftermath I saw on Thursday, I thought I would post the rules for deducting casualty losses. Hopefully, my friends and neighbors won't have to exercise this information.
The definition of a casualty loss is loss as a result of the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption. It does not include normal wear and tear or progressive deterioration.
For personal use property the casualty loss is the lesser of the adjusted basis of the property or the decrease in fair market value of the of the property as a result of the casualty. The loss is reduced by any insurance or other reimbursement you receive or expect to receive.
You claim the casualty loss on Schedule A Itemized deductions. After you have subtracted any insurance reimbursement you must then subtract $100 for each event. Then subtract 10% of your AGI to determine your allowable casualty loss for the year.
The definition of a casualty loss is loss as a result of the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption. It does not include normal wear and tear or progressive deterioration.
For personal use property the casualty loss is the lesser of the adjusted basis of the property or the decrease in fair market value of the of the property as a result of the casualty. The loss is reduced by any insurance or other reimbursement you receive or expect to receive.
You claim the casualty loss on Schedule A Itemized deductions. After you have subtracted any insurance reimbursement you must then subtract $100 for each event. Then subtract 10% of your AGI to determine your allowable casualty loss for the year.
To take a casualty loss, complete Form 4684.
If you are located in a federally declared disaster area you have the option of taking the loss on the tax return for the year it occurred or the preceding tax year. If you have already filed your preceding year's tax return, you can take the loss by filing an amended return. Once you have filed to take the loss in a prior year, you have 90 days to revoke that election if it is later determined to be more advantageous to take the loss in the current year.
If you have any questions about this, please consult your tax professional.
If you are located in a federally declared disaster area you have the option of taking the loss on the tax return for the year it occurred or the preceding tax year. If you have already filed your preceding year's tax return, you can take the loss by filing an amended return. Once you have filed to take the loss in a prior year, you have 90 days to revoke that election if it is later determined to be more advantageous to take the loss in the current year.
If you have any questions about this, please consult your tax professional.
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