If I received payment from my renters insurance due to a fire in my apartment building that happened in February, how will that affect my tax return?

[jaclyn-twyford]

A fire that happened in February destroyed my apartment and all of my possessions. Thankfully renters insurance covered nearly everything that I lost. However I'm just curious if the payments I received from my renters insurance will affect my tax refund and how?

[Opus 17]

Your settlement is only taxable if it was more than your original cost for the destroyed items.  As long as that is not the case, you don't even have to report it.  If you had replacement cost coverage that did pay you more than the original purchase price of your items, the difference is taxable.  You may need to do some work to figure that out and document it.

[Amjain241114]

Please help on this issue . My claim value was around 13000 but since my limit was 8000 so renters insurance just paid me 8000.

[xmasbaby0]

@Amjain241114 

Unfortunately,  the tax laws that went into effect for 2018 and beyond say that you cannot deduct a casualty loss on your federal return, even though your insurance did not cover your entire loss.  Sorry.

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-re...

[Amjain241114]

So do I need to report this 10000 in income which I got from insurance company

[xmasbaby0]

@Amjain241114 No the insurance you received was less than the amount of your claim.  It is not taxable income and does not go on your tax return.

[Carl]

So do I need to report this 10000 in income which I got from insurance company

Generally, no. But that's "GENERALLY".  If the insurance company does not send you any type of tax reporting document then you don't report anything on any tax return.

If you do get a tax reporting document, then you are required by law to report that income. However, you will work it through the "casualty and thefts" section under the Deductions and Credits tab. You'll report/claim your losses along with the insurance payout there. That way, the payout will not be taxed. But unfortunately, the excess loss the insurance did not cover will not be deductible either.