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twkwan1668
New Member

Casualties and Thefts. Dear Madam/Sir, I entered my personal loss (Car thefts) for $10K in turbo tax. Unfortunately, my tax due doesn't reduce after my entry. Pls help?

 
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Critter
Level 15

Casualties and Thefts. Dear Madam/Sir, I entered my personal loss (Car thefts) for $10K in turbo tax. Unfortunately, my tax due doesn't reduce after my entry. Pls help?

A personal casualty loss (including a theft) is deductible if you itemize deductions. Until your itemized deductions exceeds the standard deduction you will not see any benefits.

The measure of a casualty loss is the fair market value before the casualty, less the fair market value after, less any insurance proceeds. The decrease in market value can be estimated by repair costs that restore the property to it's prior condition.

If deductible, the loss must first be reduced by $100 (in 2009 - $500), and any remainder is deductible to the extent it exceeds 10% of your adjusted gross income. As an example, if your AGI is $50,000 and the personal portion of the loss is $12,000, then the deductible portion in 2010 is $ 6,900 ( $12,000 - $100 - $5,000).

As examples, if your loss is -

--- 500, you have no deductible loss if your adjusted gross income is over $4,000
--- 1,000, you have no deductible loss if your adjusted gross income is over $9,000

Tax topic 515 has more information and links regarding casualty losses, and can be found here:http://www.irs.gov/taxtopics/tc515.html

(From the IRS definition in Tax Topic 515: "A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration. A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and it must have been done with criminal intent. ")

Casualty losses are under the deductions and credits tab under the very last item ("Other Deductions and Credits.")

In the case of a theft, copies of police reports and documentation of how and how much was stolen would be necessary if the loss were questioned by the IRS.

- Answered by bwa to this question

 

 


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