Tax Debt Relief - Casualty and Theft Losses Are Tax Deductible

Tax Debt Relief - Casualty and Theft Losses Are Tax Deductible

What is a Casualty Loss?

A casualty loss is a destruction, damage or property loss resulting from events like Sudden event (Swift, instead of gradual or progressive), unusual event (Not a day-to-day occurrence) and unexpected event (ordinarily unanticipated and unintended). For instance: If your home was destroyed by a hurricane and the president has declared to be a disaster area, then you have a casualty loss, and you are able to deduct the loss. But if your home is destroyed by a fire and was not in a disaster area, you cannot claim a casualty loss, even if your loss would be as great as that of the individual residing in a disaster region.

Keep in mind that the event must be identifiable, unusual and unexpected. Events that meet these criteria include Car accidents, Earthquakes, Fires, Floods, Disaster-related demolition, Terrorist attacks, Tornadoes, Vandalism, Shipwrecks, Storms, Volcanic eruptions, and Hurricanes. Remember Casualty and Theft Losses Are Tax Deductible in Federal tax for non residents

What Does Not Qualify As A Casualty Loss Deduction?

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Accidental breaking like glassware or dinnerware being dropped and shattering

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Arson committed by or on behalf of the taxpayer

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Progressive deterioration

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Pet-related accidents like your cat knocking over an expensive object.

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Car accidents that are willful negligent and that are caused by or on behalf of the taxpayer.

What is Theft?

Theft is the taking of money or property with the intent to deprive the owner of it. Remember the taking of property should be illegal under the law of the state where it occurred and done with criminal intent. Theft includes the taking of money or property by Blackmail, Kidnapping for ransom, Robbery, Larceny, Burglary, Embezzlement, Extortion and Fraud or misrepresentation. Theft can be claimed on Form No 4684.

How To Claim Casualty Losses Casualty and theft losses are first reported on Form 4684. You can then enter the resulting number on Schedule A when you itemize, then transfer the number from Schedule A to line 40 of the 2017 Form 1040. In addition to this, the line on Form 1040 is different but beginning with the 2018 tax year.

How To Prepare For A Potential Disaster Loss Now? You should make an inventory list of all the items in your home or office, or video all your belongings inside and the outside of your property and your vehicles. Apart from this, you have to make sure you either upload a copy of the video or inventory list to a cloud storage account, a trusted family member or friend or put a copy of all in a safety deposit box in any other place.

Ensure your insurance is up to date as well as be sure to have a go-bag ready. This is a waterproof bag with document several other papers that you can put into this go-bag.