Was at fault in accident, and damage was $5k beyond my insurance. I set up payment with other driver's insurance company to cover the $5k; can I write off these payments?

[tobyjacobs2]

Not much to add - payments are about $200/mo., so write-off could be somewhat significant. Thanks! 

[Texas Roger · Accepted solution]

This would be a casualty loss. The hurdle to actually get a tax deduction is somewhat high. You can only deduct the amount of the loss less $100 in excess of 10% of your AGI. That amount is added to other itemized deductions. If the total of all your itemized deductions is more than the standard deduction, you may get a tax benefit. 

[tobyjacobs2]

Great, thanks. So just to make sure I'm understanding if my AGI is $30K, then 10% is $3K and I can list $3100 as an itemized casualty loss or $2900?

[Texas Roger]

You must subtract $3000 from your loss minus $100. The balance, if any, would be the loss you could enter on your tax return as an itemized deduction. $5000 loss minus $100 is $4900. $4900 minus $3000 (10% of your AGI) leaves $1900 that you can deduct.