Questions & Answers

Casualty and Theft Losses

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Casualty loss to nonbusiness property is only deductible if due to a federally declared disaster. A casualty loss from a federally declared disaster can be taken as an itemized deduction if the loss exceeds $100 and the total amount of all losses exceeds 10% of your adjusted gross income. Nonbusiness property casualty and theft losses not from a federal disaster can only be used to offset casualty and theft gains.

Casualty and theft losses are losses from fire, theft, storm, hurricane, flood, sonic boom, earthslide, earthquake, or other sudden, unexpected, and unusual causes. Damage to your automobile resulting from a collision is also a casualty loss. Termite damage is not considered a casualty loss because it fails the "suddenness" test.

If the casualty loss relates to your business, you can deduct the full amount on Schedule C as a business expense.

Any money you receive from insurance, government, or other parties to compensate for the damage reduces the amount of loss you can claim on your tax return.

You may be able to deduct more if the loss is due to a qualified disaster.

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