IRS Deudctions

Figuring Out Tax Deductions

How to figure out the tax deductions of casualty and theft losses?

Section A of Form 4684

In figuring out the tax deductions for casualty and theft losses, use Section A of Form 4684. Form 4684 Section A is used to figure out your tax deduction for a casualty or theft loss of personal use property. Form 4684 is also used to report a gain.

Section B of Form 4684

Section B of Form 4684 reports business and income producing property losses and gains.

These are entered on line 19 of Schedule A.

If you are figuring a deduction for losses from more than one casualty or theft event, use a separate Form 4684 to determine the gain or loss caused by each event. Apply the $100 rule limit to each loss. Complete each form to line 12. Then combine the gains and losses on one Form 4684 and reduce the combined loss by 10% of your AGI. Complete the Form 4684 with the combined totals and file all forms with your tax return.


When to deduct a loss?

Deduct a theft loss in the year you discover the theft. Generally, you can deduct a casualty loss only for the tax year i which the casualty occurs. This is true even if you do not repair or replace the damaged property until a later year.

However, if you have a loss in a Presidentially declared disaster area, you can choose to deduct the loss on your tax return either for:

  • the year the casualty occurred or
  • the year immediately preceding the year the casualty occurred.

You could even file an amended tax return for the previous year to claim the tax deduction on the loss if you have already filed a tax return for the previous year.