Happy Thursday and happy spring! For those of you that live in Maryland, Tuesday and Wednesday certainly didn’t feel like the first two days of spring! We had more snow the first two days of spring than we had all winter long!

With the arrival of spring comes Tax Day. For those of you counting, we are down to 26 days until the Tuesday, April 17 deadline! Remember, if Wealth Builders is filing your taxes, all tax data needs to be into our office no later than Friday, March 31 in order to ensure that an extension need not be filed.

We have been talking about all of the changes the Tax Cuts and Jobs Act (TCJA , or “Tax Reform”) brought with it. Today, we are talking about the personal casualty and theft deduction.

Before tax reform, filers who were victims of personal property loss due to fire, flood, theft, shipwreck, or storm were Flood Damageeligible to claim those losses as a deduction from their taxes as long as a few qualifications were met:

  • Only losses NOT reimbursed through insurance qualified for the deduction
  • The loss had to amount to more than $100
  • The taxpayer had to itemize deductions and NOT claim the standard deduction to qualify
  • Amount of losses being claimed had to exceed 10% of adjusted gross income (AGI)

As with many of its itemized counterparts, the personal casualty and theft deduction was mostly dissolved with TCJA. The deduction was kept intact ONLY for casualty losses incurred during a FEDERALLY declared disaster.

Again, losses claimed due to federal disaster still have to meet a couple of qualifying criterion before they can be claimed. They must exceed the $100 floor and only losses exceeding 10% of AGI may be claimed.

Due to these changes in the tax structure, you may want to examine your current insurance policy to make sure that you have the amount of coverage you need. Since most casualty losses have been eliminated (unless of course they occur due to a “federally” declared disaster), that tax write-off that once existed is gone.

If you have questions regarding the deductibility of an expense you suffered due to theft, weather, or some other event, give our office a call. Our tax experts can help you to determine if the loss is deductible and how to best proceed so that you can get the maximum benefit possible. The consultation is free – so what do you have to lose? Call today!

“2017 Tax Reform: Deductibility of Casualty and Theft Losses Under the New Law.” The National Society of Tax Professionals, 29 Jan. 2018, nstp.org/blog/2017-tax-reform-deductibility-casualty-theft-losses-new-law/.

“Tax Reform 2018 Explained.” Magnify Money, 9 Mar. 2018, www.magnifymoney.com/blog/news/tax-reform-2018-explained/.