Have a Tax Question? Ask a Tax Expert
Hello JA Guest,
To deduct theft losses, there is first a $500 deductible which applies. After deducting the first disallowed $500, you must further reduce your loss claim by 10% of your adjusted gross income. The balance of the losses may then be claimed as an itemized deduction on Schedule A of your tax return.
If your casualty or theft loss deduction causes your deductions for the year to be more than your income for the year, you may have a net operating loss (NOL). You can use an NOL to lower your tax in an earlier year, allowing you to get a refund for tax you already paid. Or, you can use it to lower your tax in a later year. You do not have to be in business to have an NOL from a casualty or theft loss.
Here is a link to the IRS publication 547 which discusses in more detail how to deduct a theft loss.
Thank you JA Guest
I HAVE POLICE REPORT AND INSURANCE CLAIM ON MY HOME OWNERS INSURANCE, DO I HAVE TO SHOW RECIEPTS FOR 40 YEARS OF GIFTS INCLUDING MY WIFES ENGAGEMENT RING MOST OF THE CLAIM WAS JEWLERY THAT I AN FAMILY GAVE TO HER AS GIFTS OVER OUR 40 YEAR MARRY LIFE.
Hello again JA Guest,
If your homeowner's insurance reimbursed your for this loss, you will only be able to deduct the portion of the loss which was not covered by your insurance.
As far as showing proof of the loss, you are not actually required to submit any documentation when you file your tax return and claim the deduction. This would only be needed in the event your return were to be audited.
In that case, you will need to provide as much substantiation as you can, much the same as you were required to provide to the insurance company. If you do not have receipts for all the items which were stolen, then other supporting evidence such as photographs of the stolen items or affidavits from people who gave you the gifts, or something of that nature might be used. Ultimately it would be up to the IRS examiner on the audit to decide if the proof of loss was sufficient for it to qualify.