What can I deduct from storm damage?

[NancyG · Accepted solution]

You can only claim casualty tax losses if your loss amounts to more than 10% of your adjusted gross income. The IRS requires that insurance reimbursement and an additional $100 are also deducted from the amount you are claiming when taking your casualty loss deduction. You don’t have to worry about the details when claiming the casualty loss, TurboTax will make all of the calculations for you and walk you through the appropriate questions, but here is an example:

Your home is damaged by a tornado. Your home was documented to have a $50,000 reduction in fair market value, but your adjusted cost basis was $20,000. So, now you have to go off the lower amount — $20,000. On top of that, you have tornado insurance that covers $10,000 of the damage. So, what’s left that was unpaid as part of your claim is $10,000. You subtract $100 from that number to end up with $9,900. Now, consider your AGI. If your AGI is $45,000, 10% is $4,500. You can deduct the portion of your loss above the $4,500, so you subtract that number from $9,900. Your total deduction is $5,400.