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Common questions about casualty and loss amounts reduced on Schedule A in ProConnect Tax

by Intuit• Updated 1 year ago

Starting in 2018, you can no longer claim itemized deductions for personal casualty and theft losses unless those losses occurred during and directly because of a federally declared disaster.

You need to complete and attach Form 4684 to figure the amount of your loss to enter on Schedule A, line 20.

What losses can an individual deduct?

Individuals may be able to deduct part of all of each loss attributable to a federally declared disaster caused by theft, vandalism, fire, storm, or other similar causes. Refer to Pub 547 for information on federal disaster area losses.

Individuals can no longer claim a loss on a deposit in an insolvent or bankrupt financial institution as a personal casualty or theft loss unless you have personal casualty gains to the extent the losses don’t exceed your gains.

What counts as proof of the loss?

Proof of costs associated with the loss may include:

Appraisal fees
Photographs
Receipts for improvements or restorations
Newspaper clippings or articles about the disaster

Are there limits to personal casualty losses?

Starting in 2018, personal casualty losses are deductible only to the extent that they're attributable to a federally declared disaster. Net casualty losses no longer have to exceed 10% of AGI, but there is a $500 per casualty limit.

Special rules apply if you had both gains and losses from nonbusiness casualties or thefts. See the instructions for Form 4684 for more details.

How do I enter Form 4684?

Check out this article for information on entering Form 4684 in the Individual module.

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