Casualty loss

The IRS announced tax relief for individuals and businesses in 67 Texas counties that were affected by Hurricane Beryl. Taxpayers in these areas were given until February 3, 2025, to file their federal tax returns and make tax payments for their 2023 tax returns.

You enter your casualty loss for actual damages in the Deductions and Credits section of TurboTax using the instructions provided below.

If you are using TurboTax Desktop, you will:

1. Click on the "Deductions & Credits" tab on the gray bar across the top of your TurboTax screen
2. Click on "I'll choose what I work on" 
3. Scroll down to "Casualties and Thefts" 
4. Click on "Start"
5. Click on "Add a Casualty or Theft"
6. Enter your information on the follow-up screens

If you are using TurboTax Online you will:

1. Continue your tax return
2. Click on "Deductions & Credits" in your left panel
3. Scroll down to "Other Deductions and Credits"
4. Click on the (down-facing) caret to the right of "Other Deductions and Credits"
5. Scroll down to "Disasters, Theft, and other property loss or damage"
6. Click on "Start"
7. Enter your information on the follow-up screens

The IRS provides the following guidelines for reporting casualty losses:

• if your property is personal-use property or isn't completely destroyed, the amount of your casualty loss is the lesser of:
• The adjusted basis of your property, or
• The decrease in fair market value of your property as a result of the casualty

Individuals may claim their casualty and theft losses as an itemized deduction on Schedule A (Form 1040), Itemized Deductions.

For property held by you for personal use, you must subtract $100 from each casualty or theft event that occurred during the year after you've subtracted any salvage value and any insurance or other reimbursement. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year.

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.

 If you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to treat the casualty loss as having occurred in the year immediately preceding the tax year in which you sustained the disaster loss, and you can deduct the loss on your return or amended return for that preceding tax year.

If your deductions, including your loss deduction, are more than your income, you may have a net operating loss (NOL). You don't have to be in business to have an NOL from a casualty. 
 

Click here for "IRS announces tax relief for victims of Hurricane Beryl in Texas; various deadlines postponed to Feb. 3, 2025"

Click here for "Topic no. 515, Casualty, disaster, and theft losses"
 

Click here for "About Casualty Deduction for Federal Income Tax"

Click here for "Tax Benefits Available for Victims of Natural Disaster"

{Edited 03/04/2025|11:29 AM PST}

@jnates