@bledsoe112770 https://www.irs.gov/taxtopics/tc515#:~:text=If%20you%20have%20a%20qualified,value%20and%20any%20othe....
"For property held by you for personal use, you must subtract $100 from each casualty or theft event that occurred during the year after you've subtracted any salvage value and any insurance or other reimbursement. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year."
OR
https://turbotax.intuit.com/tax-tips/tax-relief/about-casualty-deduction-for-federal-income-tax/L8AV...
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 volcanic eruption. A casualty doesn't include normal wear and tear or progressive deterioration.
Generally, you may deduct casualty and theft losses relating to your home, household items, and vehicles on your federal income tax return if the loss is caused by a federally declared disaster. You may not deduct casualty and theft losses covered by insurance, unless you file a timely claim for reimbursement and you reduce the loss by the amount of any reimbursement or expected reimbursement.
Different states may/ may not allow the deduction, always enter it in TT. Do note if you receive insurance in a subsequent year, it will be income if you got a deduction in the current year.
To report the loss due to a casualty in TurboTax Online:
- Go to Deductions & Credits
- Select Disasters, theft, and other property loss or damage
- Click to add a casualty or theft
- Fill in the Description of the event (e.g., "fire", "theft")
- Fill in the date
- Select the Property Type
- Choose "no" when asked if it was used in a passive activity (assuming it's used in your Schedule C business) or yes if passive income related to rentals
- Enter the description of the property, date acquired, cost basis (for business property, your adjusted basis after depreciation), and any insurance reimbursement
- Enter fair market value before and after the casualty (if lost due to theft, value after is 0)
- Select if used in business.
- Select Done
When you preview your return, look for the loss to appear on Form 4797.
Claiming the loss
Individuals may claim their casualty and theft losses as an itemized deduction on Schedule A (Form 1040), Itemized Deductions (or Schedule A (Form 1040-NR)PDF, if you're a nonresident alien). For property held by you for personal use, you must subtract $100 from each casualty or theft event that occurred during the year after you've subtracted any salvage value and any insurance or other reimbursement. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year.
If you have a qualified disaster loss you may elect to deduct the loss without itemizing your deductions. Your net casualty loss doesn't need to exceed 10% of your adjusted gross income to qualify for the deduction, but you would reduce each casualty loss by $500 after any salvage value and any other reimbursement. For more information, see the Instructions for Schedule A (Form 1040) or Instructions for Form 1040-NR and Publication 547.
Report casualty and theft losses on Form 4684, Casualties and TheftsPDF . Use Section A for personal-use property and Section B for business or income-producing property. If personal-use property was damaged, destroyed or stolen, you may wish to refer to Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property). For losses involving business-use property, refer to Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook. These workbooks are helpful in claiming the losses on Form 4684; keep them with your tax records.
When to deduct
Casualty losses are deductible in the year you sustain the loss, which is generally in the year the casualty occurred. You have not sustained a loss if you have a reasonable prospect of recovery through a claim for reimbursement. If you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to treat the casualty loss as having occurred in the year immediately preceding the tax year in which you sustained the disaster loss, and you can deduct the loss on your return or amended return for that preceding tax year. See Revenue Procedure 2016-53 for guidance on the time and manner of making and revoking an election under Code Section 165(i). Review Disaster Assistance and Emergency Relief for Individuals and Businesses for information regarding timeframes and additional information to your specific qualifying event.
Theft losses are generally deductible in the year you discover the property was stolen unless you have a reasonable prospect of recovery through a claim for reimbursement. In that case, no deduction is available until the taxable year in which you can determine with reasonable certainty whether or not you'll receive such reimbursement.
When your loss deduction exceeds your income
If your deductions, including your loss deduction, are more than your income, you may have a net operating loss (NOL). You don't have to be in business to have an NOL from a casualty. For more information, refer to Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts.
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