- Days left

Claiming Tax Deductions for Weather Damage

Home damaged by weatherDid your roof collapse under the heavy weight of the snow? Did lightning strike your guest house? You probably know that insurance can protect your home and possessions during damaging weather (which we've had a lot of this year), but did you know that you may claim tax deductions for weather damage?

Here are some key points that came out of a recent conversation with the IRS.Weather-Related Damages Must Meet the Definition of a Casualty Loss

As long as the weather-related damage meets the definition of a casualty loss -- which is something that happens suddenly and unexpectedly as opposed to something that happens gradually -- you can take the deduction. In other words, a roof that collapses because of heavy snow would meet the definition of a casualty; slow, gradual water seepage in a basement would not.

Determine the Loss Amount

Here's where it can get complicated. You have to know the Fair Market Value of your property before and immediately after the casualty (what a willing buyer would pay for it) as well as the Adjusted Cost Basis (property cost plus capital improvements, minus depreciation and other factors). Take whichever amount is lower, subtract insurance or other reimbursements received or expected to be received. Then subtract another $100 for each casualty that occurred during the year (the $100 rule, per IRS) and reduce the loss again by 10% of your adjusted gross income.

File Form 4684

Report the loss on Form 4684 (You can download this from irs.gov), and take it as an itemized deduction on your Schedule A. The IRS tells me that you do not have to provide any additional documentation -- such as photos or videos of the storm-induced damage -- but that you should always have this information filed away for backup purposes.

Take the Loss in the Year the Casualty Occurred

Casualty losses are deductible in the year in which they occurred -- unless the loss happens in a federally declared disaster area. In which case, you can elect to take the loss in the preceding year, submitting an amended return if you've already filed.

Search Homes for Sale
See photos of homes for sale in your area and across the country on AOL Real Estate

Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Intro to Retirement

Get started early planning for your long term future.

View Course »

TurboTax Articles

8 Things You Think Are Tax Deductible That Aren't

There?s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don?t qualify under IRS guidelines. Here are a dozen items that can lead to unpleasant surprises in case of an audit.

9 Things You Didn't Know Were Tax Deductions

Few realizations are more painful than realizing that you forgot to include a tax deduction that would have lowered your tax bill or increased your tax refund on your tax return. Here are some tax deductions that you shouldn't overlook.

A Comparative Look at State Taxes

Ever wondered which state has the highest gas tax or the lowest overall tax burden? Interact with the infographic below to compare income tax, property tax, and other taxes by state.

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
cxw2012neusoft@163.com

aaaaaaaaaaaaaaaaaaaaaaaaaaaa

May 22 2012 at 1:35 AM Report abuse rate up rate down Reply