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Form 4684: Getting Credit for Casualties and Thefts

Most people are aware that businesses rarely lose anything from disasters or thefts because they are usually insured against them and then whatever insurance does not cover can be written off their taxes. However, many people are not aware that the same is true for individuals. While you cannot write all losses and cannot write off additional expenses related to such losses, you can write off the basic amount lost within certain limits. To do this, you have to fill out a Form 4684 which is filed in conjunction with your personal tax return at the end of the tax year, your 1040 irs tax form.

Generally speaking, you can claim a tax deduction for losses stemming from fire, storms, shipwrecks and other disasters as well as from criminal victimization like larceny, embezzlement, and robbery. Prior to 2009 you could only make a claim for losses over $500 and the upper limit was ten percent of your Adjusted Gross Income (AGI). However, beginning with taxes failed in 2010 the lower limit has been reduced to $100, so you may be able to get some relief for almost any loss. If you were insured against the loss, you can only claim the amount that was not covered by the insurance.

As is usually the case with rules and regulations issued by the Internal Revenue Service (IRS), they are all extremely detailed and there are many losses that you cannot claim. For example, you cannot claim additional expenses: your car was stolen and you were forced to rent a car for a few weeks until you could get a new one: while the car itself can be claimed, the cost of renting the replacement car cannot be. There are many similar rules spelling out specifically what can and can not be claimed and if audited you will be expected to be able to document your claim.