When To Claim a Disaster Loss on Your Federal Income Tax
Disaster Loss Deductions
Casualty Loss Categories
Here are the three casualty losses categories that refer to federally declared disasters. The requirements for each loss vary, which is outlined in Publication 547 or Form 4684.
- Federal casualty losses,
- Disaster losses, and
- Qualified disaster losses.
For tax years 2018 through 2025, if you are an individual, losses of personal-use property from fire, storm, shipwreck, or other casualty or theft are deductible only if the loss is attributable to a federally declared disaster (federal casualty loss). Casualty losses are deductible in the year you sustain the loss, which is generally in the year the casualty occurred. You have not sustained a loss if you have a reasonable prospect of recovery through a claim for reimbursement, such as insurance.
Calculating the Casualty Loss Deduction
If you are claiming a deduction based on the property that was destroyed, you will need to calculate the casualty loss by subtracting the salvage value from the adjusted basis of the asset and then subtracting any insurance proceeds from the result.
What is a deductible casualty expense?
Which type of loss is not deductible?
- Long-term processes, such as erosion, drought, decomposition of wood, or termite damage.
- Any loss that arises from what the Internal Revenue Agency (IRS) considers to be a "foreseeable" event (one that can be known about or guessed before it happens).
How do I claim disaster loss on my taxes?
Claiming a disaster loss or amending your tax return
If you need further information on disaster losses, your particular options for claiming the loss, or if you wish to amend your return to claim your loss, please give us a call.