When you lose an item due to an accident, theft, or act of nature, you may have a tax deduction for the value of the property that is not covered by your insurance. The tax deduction is called a "casualty loss" deduction. The lost item can be business property, investment property, or personal property.
Deductible casualty losses can result from a variety of causes such as car accidents, earthquakes, floods, fire, hurricanes, or vandalism.
Casualties that are not deductible losses include progressive deterioration such as termite or moth damage. Also the loss of a personal belonging, like a ring that is dropped in the garbage disposal, is not deductible.
To enter a Casualty Loss, in TurboTax, jump to the entry area for casualty loss:
- Enter casualty loss in the TurboTax search box and press the Enter key.
- On the Stolen or Damaged Items screen, click Yes.
- Answer the interview questions describing your event.
- When finished at the Property Summary screen,
Enter any additional property losses by clicking the Add a Property button.
