What is a casualty loss?
A casualty loss can result from 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. A casualty does not include normal wear and tear or progressive deterioration.
What is Theft Loss?
A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and it must have been done with criminal intent.
Many people do not realize that these losses can to a certain extent be a deduction on your tax return. The amount of loss you can claim is the lesser of the adjusted basis of your property or the decrease in fair market value of your property as a result of the casualty or theft loss. For property held by you for personal use once you have subtracted any salvage value and any insurance or other reimbursement you must subtract $100 from each casualty or theft event that occurred during the year. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year.
Keep in mind that you may not deduct casualty and theft losses covered by insurance unless you file a timely claim for reimbursement through your insurance company. As noted above you must reduce the loss by the amount of any reimbursement.
Some of these adjustments could be waved under special circumstances which are released by the government during natural or severe disasters. There are many rules and exceptions that could aid you in your time of loss. Let the experts at Lindemeyer CPA put their experience to work for you and help you through this tough time.