My home burnt down in the Palisades fire (2025). Any 2024 or 2025 tax relief?

[DIY_Tax_Person]

My home burnt down in the Palisades fire (Jan 2025). Am I entitled to any sort of tax deduction for my 2024 return or next year's 2025 return? I know that I can get a free filing extension until October 2025, but I'm going to file before April 15th anyway.

[Vanessa A]

You can choose to claim the deductions for your losses on either your 2024 or 2025. Because this was declared a major disaster, you may be eligible to claim your losses in addition to the standard deduction instead of having to claim them as an itemized deduction. 

In addition to being able to claim your casualty losses on your return for either 2024 or 2025, you are able to take a retirement plan distribution that is not subject to the 10% early withdraw penalty and any disaster relief is not considered taxable income. 

You will be able to enter your casualty losses in TurboTax by selecting:

1. Deductions and Credits
2. Casualties and Thefts under Other Deductions and Credits
3. The enter the description, property type and "This event qualifies as a federally declared major disaster loss"
   
   IRS: California wildfire victims qualify for tax relief

[DIY_Tax_Person]

I have a variable annuity for many years. Is there a limit to how much $$ I can withdraw? I'm over the age of 59 1/2. I would love to yank out as much money from this expensive, inferior financial product as possible!

Also, where in turbo tax (or what forms) would I look at for this deduction?

[DIY_Tax_Person]

You said, "You are able to take a retirement plan distribution that is not subject to the 10% early withdraw penalty". I turned 59 1/2 before the fire, so I assume there is NO incentive to take distribution? Is there any tax savings as far as 'ordinary income' goes? Variable annuity withdrawals are taxed as ordinary income.