Publication 547 (2023): Casualties Disasters And Theft

Publication 547 guides taxpayers on claiming deductions for losses to personal property due to casualties, disasters, and thefts. It explains what qualifies, how to calculate the loss, and the current deduction limits.

What is Publication 547?

Published by the Internal Revenue Service (IRS), Publication 547 is a detailed resource for taxpayers seeking to deduct losses on their personal property. It covers three specific situations:

Casualties: Damage or destruction due to sudden, unexpected events like storms, fires, car accidents, or vandalism.

Disasters: Losses attributable to federally declared disasters, offering some special considerations.

Thefts: Stolen property, including cash and personal belongings.

Key Points To Remember About Publication 547

A. Deduction Eligibility: For tax years 2018-2025, personal casualty and theft losses are generally deductible only if:

  1. They occur in a federally declared disaster area.
  2. They exceed $100 per event and 10% of your adjusted gross income (AGI).
  3. Exception: If you have personal casualty gains in the same year, all casualty and theft losses become deductible, regardless of location.

B. Qualified Disaster Losses: Losses in federally declared disaster areas may qualify for special treatment, including:

  1. Increased standard deduction: $500 instead of $100 per event.
  2. Waived 10% AGI limitation.

C. Calculating Your Loss: Determine the fair market value of your property before and after the event, then subtract the latter from the former. Include repair or replacement costs if exceeding the decrease in value.

D. Insurance and Reimbursements: Reduce your loss by any insurance or other reimbursements received.

E. Recordkeeping: Maintain detailed records documenting the event, loss, repairs, and reimbursements.

F. Filing: Report your losses on Form 4684, Casualties and Thefts, and attach it to your tax return.

For the current year's Publication 547, click here.