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:
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.