Would it be worth it to file casualty/theft loss for $20,500?

jehersch — Tue, 04 Jun 2019 01:04:42 GMT

I had a contractor take $30,500 on a basement remodel and didn't finish the work. He finished approximately $10,000 of it with $20,500 taken. Insurance does not cover this so, I have no reimbursements at all. It would be over 10% of the households gross income. Would I benefit from filing this as a casualty/theft loss?

Yes, potentially, but only if you meet a certain threshol...

KennethB — Tue, 04 Jun 2019 01:04:43 GMT

Yes, potentially, but only if you meet a certain threshold and you itemize.

Here is how casualty losses work: Individuals are required to claim their casualty and theft losses as an itemized deduction on Form 1040, Schedule A Itemized Deductions.

For property held by you for personal use, Subtract any salvage value (zero for theft) and any insurance or other reimbursements from the loss amount.
Then, subtract $100 from each casualty or theft event that occurred during the year.
Then, take that amount and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year.
That's the amount that goes on your Schedule A Itemized Deductions.

If your property is personal-use property or is not completely destroyed, the amount of your casualty loss is the lesser of:

The adjusted basis of your property, or
The decrease in fair market value of your property as a result of the casualty

More details can be found at this link http://www.irs.gov/taxtopics/tc515.html

You must file itemize deductions and file a Schedule A as I stated above. But, if you want to give it a shot in the Casualty and Theft section of the software, it wouldn't hurt.

How to enter it into TurboTax: While inside the software and working on your return, type casualty loss in the Search at the top of the screen (you may see a magnifying glass there). There will be a popup that says Jump to casualty loss. Select that to get to the general area.

topic Would it be worth it to file casualty/theft loss for $20,500? in Deductions & credits

Would it be worth it to file casualty/theft loss for $20,500?

Yes, potentially, but only if you meet a certain threshol...