Self-employed with a chimney fire

[Stephanie59]

I bought a house last July 7. On December 2, I had a chimney fire. I am self-employed (notary/notary signing agent and freelance editor/desktop publisher).

Please correct me if I'm wrong...

As far as I can tell, nothing associated with my fire is deductible because it wasn't a "declared" casualty.

I live in Colorado. My house froze since asbestos was found and no plumber would go in to blow out the pipes (don't get me started on all that). 

So far, Allstate has paid for almost everything. They didn't cover $8,600 of the structure portion of the asbestos abatement. And they won't pay for my conversion to a gas insert even though the fire was caused because the fireplace/chimney was built too close to the house. I don't have that in writing because Allstate didn't request the fire inspector write one, so I don't know what he told them. No one is talking. While the fire inspector told me the fireplace/chimney/mantle/hearth must be torn out and replaced, the restoration company (I don't know what Allstate told them either) called in a chimney sweep who plans to repair the chimney (the top as far as I can tell from the estimate), remove and replace the insert liner, and clean and reinsert the now-rusted wood fireplace insert (it was new, being installed days before closing, when I moved in). I'm not burning wood in that insert if they won't fix the cause of the fire. 

If my printers and scanner didn't survive the freeze (that is TBD), Allstate should replace those. I don't know about the folders/envelopes/printer paper. But, I can't imagine they survived being frozen, thawed, frozen, thawed, over and over again, not to mention pens and printer ink. I haven't looked yet. 

Most (if not all) of what I paid that won't be reimbursed I paid in 2023. 

As for work, I didn't work at all last year. I have Fibromyalgia and an unknown cause of mind-numbing fatigue. It's complicated. But suffice it to say that I must pace myself when doing anything physically and mentally. My life is exhausting. After I sold my house in August 2021, I did one more job. I was homeless, living 5 months in a hotel with 2 large dogs (walking them a dozen times a day was exhausting), then living in two vacation rentals (being a freelancer, I don't have a "monthly" income). I haven't worked since.

After I bought the house last year, I had the first of two long-awaited hand surgeries. I was going to finish unpacking then contact my current clients and put myself out there for new clients until summer when I planned surgery #2, but I had a fire instead. Since then, I've been moving from rental to rental while my house is slowly being restored. I couldn't do any closings because my laser printer and scanner were in the house. I briefly thought about taking them with me before the asbestos was found, but in hindsight, I'm glad I didn't. I just moved into rental number 7! I'll move at least once more before I get to move back home. I wouldn't have had the energy to do closings. If any of my editing clients had called, I would have forced myself to work. But they didn't, and I didn't have the energy to look for other clients. 

Anyway, I want to confirm that nothing from that fire (including loss of income) is deductible.  Technically, the fire didn't stop me from working my editing job if someone had called or from contacting possible clients. My disability did.  God, this all sucks.

Thanks.

[ShirlynW]

Sorry for your loss.

It depends. You may claim a casualty loss as an itemized deduction on Schedule A.  For property held by you for personal use, you must subtract $100 from each casualty event that occurred during the year after you've subtracted any salvage value and any insurance or other reimbursement. 

[Stephanie59]

Thanks.

Define "casualty event." The fire is one casualty event?

"Property held by you for personal use." The house? I work from home except when leaving the house to notarize/conduct a closing. It's very rare that I work on-site for my editing work; the last time was in 2018. I have one all-in-one ink-jet printer I use for personal use. The laser printer, scanner, portable printer, portable scanner, and supplies associated with notarizing are all reserved for business use. 

Finally, can you cite your source? I ask because the one document I can find (and everything else that mentions casualty refers to it) is the IRS Publication 547, Casualties, Disasters, and Thefts. This is what prompted my question in the first place because it says they must be "declared" by a higher power. I didn't find anything anywhere that discusses casualties not caused by terrorists/war, natural disasters, or plane/train mishaps affecting large numbers of people.

I did find the $100 rule in IRS Pub 547. But, again, I don't think I qualify because it wasn't a declared casualty. I qualify if every other regard. It was unplanned and unexpected, and I didn't cause it. 

I'm filing an extension. I'll go through TT from the beginning and let it lead me through. Maybe, I won't hold my breath, I'll see something that shows I can claim something business-wise. 

Thanks, again.

Stephanie

[AnnetteB6]

For tax years 2018 through 2025, personal casualty losses (such as from a fire) have been suspended.  The Tax Cuts and Jobs Act passed in 2017 made this change.  So, you are correct that the casualty must have been from a declared disaster.  

The source for this statement is IRS Publication 547 on page three of the document under the heading Deductible Losses.

@Stephanie59 

[Stephanie59]

Thanks.

I think I know the answer to this, but...

I work from home. Is anything business-wise deductible from my home office?

Thanks

Stephanie

[DawnC · Accepted solution]

If you are self-employed, yes, you may qualify to take a home office deduction.   But, if you are an employee that receives a W-2, then NO, you cannot deduct home office expenses.    You may be able to claim the home office deduction if your office is:

• Used regularly and exclusively for your business, and
• Is your principal place of business (both conditions must apply).

When you enter your home office information in TurboTax, we'll ask some questions to determine if you can claim the deduction and how much the deduction is worth. You’ll need information like the square footage of your residence and the rooms you worked in.

Home Office Expenses

How do I claim in TurboTax?