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|Posted on October 8, 2015 at 12:40 AM|
Today I would like to discuss the deductions for Casualty and Theft Losses that may help lower your tax bill. A Casualty Loss is the damage, destruction, or loss of property resulting from a recognizable event. This inlcudes, but is not limited to, Fire, Tornados, Hurricanes, Flooding etc. A casualty is sudden, unexpected and unusual. A Theft Loss is the taking and removing of money or property with the intent to deprive the owner of it. It must be illegal under the state law, and done with criminal intent.
Examples of Deductible Losses:
Examples of Nondeductible Losses:
There are a few cases where a nondeductible loss can become a deductible loss. One example, the corrosive damage caused by defective drywall installed in homes between 2001 and 2009. See your tax professional if you think you may qualify for a casualty or theft loss of items not listed.
When claiming the loss there are a few deduction limits to be aware of:
Your casualty or Theft Loss must be reduced by any and all insurance reimbursements received and is the lesser of your cost or basis in the property or the reduction in the fair market value due to the loss. Form 4684 is used to claim a loss and then transfered to form 1040 schedule A.
There are special rules for losses in a Federally Declared Disaster Area. See you tax professional for specific information on Casualty and Theft losses for your situation.
As always, Excel Tax and Consulting Services is here to help lower your taxes accurately. Call or Stop by today.