October 5, 2017

Other Casualty And Theft Losses You Can Claim On Your Tax Return

Many affected by Hurricane Harvey will be claiming home, furniture, vehicle and other casualty losses on their tax return. In addition to those losses caused by natural disasters, there are many other casualty and theft losses you can claim on your tax return.

When reporting the following, remember that each property’s casualty and theft loss is calculated separately. Spoiler alert: the dog ate my furniture does not fly with the IRS.

Deductible Casualty and Theft losses:

    • Car accidents not caused by your own willful negligence or willful act.
    • Earthquakes.
    • Fires not willfully set by you or someone you paid.
    • Floods.
    • Government ­ ordered demolition or relocation of a home that is unsafe to use because of a disaster.
    • Mine cave-ins.
    • Shipwrecks.
    • Sonic booms.
    • Storms, including hurricanes and tornadoes.
    • Terrorist attacks.
    • Vandalism.
    • Volcanic eruptions.
    • Blackmail.
    • Burglary.
    • Embezzlement.
    • Extortion.
    • Kidnapping for ransom.
    • Larceny.
    • Robbery.
    • Ponzi-type investment schemes.
    • Loss occurred when a bank, credit union, or other financial institution becomes insolvent or bankrupt.

Nondeductible Casualty and Theft losses:

  • Accidental breaking glassware or china under normal conditions.
  • Loss of property due to damage by a family pet.
  • A fire if you willfully set it or pay someone else to set it.
  • Car accidents caused by your own willful negligence or willful act.
  • Progressive deterioration.
  • Most losses of property caused by droughts.
  • Termite or moth damage.
  • Mold.
  • Damaged trees caused by diseases or pests unless it was in result of a sudden, unexpected infestation.
  • Losses due to death of livestock, whether or not of epidemic proportions.
  • A decline in market value of stock caused by disclosure of accounting or other illegal misconduct by the officers or directors of the corporation that issued the stock.

Finally, something else to consider is casualty and theft losses of property used in performing services as an employee can also be reported on your tax return.

The specific rules applying to these deductions can be complicated, so you may want to consult a tax professional if you are considering these deductions.