Deducting a Casualty Loss

How to deduct a casualty loss?

To deduct a casualty loss, you must be able to prove that you suffered a casualty.

Your records must show all of the following:

• The type of casualty (fire, car accident, etc)
• The date the casualty occurred
• That the loss was a direct result of the casualty
• That you owned the property, or, if you leased the property, that you were contractually liable to the owner of the loss.
• Whether a claim for reimbursement exists and there is a reasonable expectation of payment.

Records of the casualty loss

Your records should include photographs of the damaged property. If is helpful to have photos of the property before it was damaged. Newspaper articles reporting the fire, hurricane, etc. help to prove that the casualty occurred and that your loss was a direct result of the casualty.

You will also need your deed, sales receipt, or other proof of ownership or title.

Which tax form to use to report casualty loss?

Both casualty loss and theft loss are reported on Schedule A, line 19 if the loss relates to damages to personal use property. The tax form 4684, Casualties and Thefts, is used to calculate the tax deduction resulting from casualty loss or theft loss.