Losses You Can Claim - Casualty, Disaster, and Theft

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The property you own may be subject to certain types of losses during a tax year that you can use to deduct from your income. These include casualty and theft losses that cause damage to your house, your personal property, and even your vehicles. Losses of this type can only be used to reduce your income if you have no insurance coverage for those losses.

Casualty Losses

The term “casualty loss” may be confusing to some, but the definition is not that complicated. Very simply, a casualty loss is any type of loss or damage that causes you to incur some type of financial loss. This typically means a sudden or fortuitous loss as opposed to gradual deterioration or wear and tear. Examples of casualty losses include damage from a fire, windstorm, floods, hurricanes, or even damage from a volcanic eruption.

Theft Losses

Theft is a more commonly understood term, and as most people know, when someone takes something from another person without permission it is generally construed as theft. More specifically, it is the taking and removal of money or property with the intent to deprive the owner of it. In order for this type of loss to be deductible for tax purposes, the taking must be illegal.

How Much Can You Claim?

To determine the value of your loss, you must consider whether the property was destroyed. If so, then the value that you can claim as a deduction will be the cost to replace the damaged item, less depreciation and salvage value.

For items that are partially damaged or repairable, the amount of your loss will be considered 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
  • The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero.
When Can You Claim The Loss?

With some exceptions, casualty losses can only be claimed in the tax year that the loss occurred. Theft losses can be claimed in the tax year in which the loss was discovered.

While the rules regarding uninsured casualty and theft losses have many finer points, the basic concept is simple. If you have financial loss due to a casualty or theft, you may use this loss to reduce your taxable income.

If you are unsure if a loss you sustained over the last tax year will allow you to reduce your taxable income, be sure to contact the friendly and professional staff at IRefund.com. Our tax experts can provide you with the guidance you need and answer any questions you may have regarding uninsured casualty and theft losses.

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Tips for Getting Your Refund Back Fast

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There are ways to improve the speed at which you receive your tax refund. One of the most important things you can do is to keep good records throughout the entire tax year. Good organizational skills will go a long way to ensure that your tax return is completed quickly by your tax preparer. For businesses, this may mean that you have to have conscientious employees who take special care in keeping accurate records for your business. In other cases, you may rely on a tax attorney to ensure that your records are in order.No matter who maintains your tax records it is very important that your records are kept orderly and accurate.

Expense records are very important, and for individuals, this will include purchase receipts, interest statements for school loans or mortgages, medical expense records, and loss documentation such as investment losses, or uninsured casualty losses.

Income records are even more important so you should make sure you have all W-2 forms provided by your employer, and if you have more than one employer, be sure to get every W-2 that is issued to you before you file your taxes. If you perform any work as an independent contractor or even freelance income, you may receive 1099 forms from the businesses that paid you. Be sure to have these records on hand as well and that they reconcile with the income information you have recorded for those clients. Any income you received throughout the year should also be recorded, and those records should be available for your tax preparer.

Another way to ensure a quick refund is to utilize EZ tax forms. This will utilize standard deductions, which means you will be able to skip the detailed work involved in itemizing your deductions. Manual forms can be used or you can complete your EZ form online. Your tax preparer can also submit this form online for you, which will result in a faster refund.

The most important overall goal to a fast refund is ensuring you have all the records you need and that they are accurate when it comes time to file you taxes. While we have outlined several important records that you will need for your return, there are many other records that you may need because each individual has special circumstances. Children, a marriage, the sale of real estate, an inheritance, or a divorce are all examples where special documentation may be required for your tax return.

If you are unsure of the records you need for your tax return, be sure to contact the professionals at IRefund.com. We can ask some simple questions that will put you on the right track before your tax return is completed.

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