I am working on my real disaster loss for tax year 2022. My FEMA disaster code is DR-4683 affecting California. I carefully read related IRS papers such as Publication 547 and Form 4684 Instructions. My understanding is my disaster is not a "Qualified Disaster", and I do not believe my loss should be reported as Qualified Disaster Loss, but rather just Disaster Loss. The two are treated differently, with Qualified Disaster Loss subject to a $500 deduction but not subject to 10% AGI deduction, versus Disaster Loss subject to a $100 deduction and also subject to 10% AGI deduction. I entered my numbers in Form 4684 TurboTax 2022 (Windows PC installed version), and asked TT to generate the tax return. I see my loss is treated as Qualified Disaster Loss, even though I correctly entered my FEMA code (DR-4683). This does not look like a software bug but a problem in interpreting the tax code. I hope the brainpower in this great community can help me understand or establish the problem.
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in the interview process did you check the box "this is a federally declared disaster (not "qualifed") and not the box for qualified federal declared major disaster. also, the property is not business or investment property.
Thank you Mike9241. The right check box certainly took care of my problem, now my case is no longer "qualified" and I am moving on.
Working on my casualty deduction further, and having read some IRS instructions, I want to go with the Safe Harbor method in reporting my losses. Specifically I am focusing on the de minimis method. Per IRS instruction for Form 4684, "If you use one of the safe harbor methods provided in Revenue Procedure 2018-08, you must attach a statement to Form 4684 stating that you used Revenue Procedure 2018-08 to determine the amount of your casualty loss. Include the specific safe harbor method used. When completing Form 4684, do not enter an amount on line 5 or line 6 for each property. Instead, enter the decrease in the FMV determined in the relevant safe harbor method on line 7." Does TurboTax interviewing process support going with de minimis method? How do I get to the result of leaving lines 5 and 6 empty, only entering loss on line 7?
Thank you so much!
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