ThomasM125
Expert Alumni

Retirement tax questions

Section 165(a) does mention casualty losses, but also allows a deduction for trade or business losses and losses in any transaction entered into for profit. So, in your case, you would normally be allowed an itemized deduction for the loss, as a miscellaneous itemized deduction.

 

However, the Tax Cuts and Jobs Act of 2017 (TCJA) eliminated the deduction until the year 2026. So, even if you do itemize your deductions in 2020, you will not be able to take a deduction for the repayment under current law. 

 

If the amount had exceeded $3,000, you could take a credit for the additional tax you paid in 2019 on your 2020 tax return. However, that is not the case here it seems.

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