Claim a Casualty or Theft Deduction
You can take an itemized deduction on your income taxes for losses due to casualty or theft. This can save you in taxes, but there are limitations on the deduction.
Instructions
1. Verify that the loss is personal and not business-related.
2. Verify that the loss is from a casualty or a theft. A casualty is a sudden, unexpected and unusual event causing the loss or damage of property. A theft is an illegal taking of money or property.
3. Determine the amount of loss. To do this, calculate the adjusted basis of the property (which is usually the cost plus improvements minus depreciation) and calculate the decrease in fair market value of the property (which is usually done by an appraisal). The smaller of the adjusted basis or the decrease in fair market value is your loss.
4. Subtract from your loss any reimbursement from insurance or a disaster fund. Do not subtract any personal gift anyone has given you to help you out.
5. Subtract $100 from your loss for any single event. You may have multiple losses from a single event, but subtract only $100 per event.
6. Subtract 10 percent of your adjusted gross income from the total of all losses from casualties or thefts.
7. Fill out Form 4684 and Schedule A with this information.
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