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Hi and welcome to Just Answer!That is correct - you may claim a deduction on your tax return for casualty loss.A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration.If your property is personal-use property or is not completely destroyed, the amount of your casualty loss is 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 You are not required to have a professional appraisal - but in case of disagreement - that would could be very helpful supporting document.Individuals are required to claim their casualty and theft losses as an itemized deduction on Form 1040, Schedule A. For property held by you for personal use, once you have subtracted any salvage value and any insurance or other reimbursement, you must subtract $100 from each casualty or theft event that occurred during the year. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year.
Casualty losses are generally deductible in the year the casualty occurred. However, if you have a casualty loss from a federally declared disaster that occurred in an area warranting public or individual assistance (or both), you can choose to treat the loss as having occurred in the year immediately preceding the tax year in which the disaster happened, and you can deduct the loss on your return or amended return for that preceding tax year.So that is correct - you may amend your 2012 tax return and claim the casualty loss deduction as if it were occurred in 2012 - so refund will be received faster.Review Disaster Assistance and Emergency Relief for Individuals and Businesses on IRS.gov, for information regarding time frames and additional information to your specific qualifying event.
If FEMA provides grant money later on is that considered taxable income?
FEMA assistance is not taxable income and does not affect benefits from any other federal program.
Also, is there a specific form number that I should file?
Yes.Casualty and theft losses are reported on Form 4684 , Casualties and Thefts. Section A is used for personal-use property, and Section B is used for business or income-producing property. If personal-use property was damaged, destroyed or stolen, you may wish to refer to Publication 584, Casualty, Disaster, and Theft
Would an appraiser determine the adjusted basis of the property as well as fair market value resulting from the casualty? If not I'm not sure how to determine these values.
The appraiser may determine the fair market value before and after the casualty. That would be two appraisals.So - the difference will generally be your casualty loss.There will be additional loss for your belongings. For those completely lost - the fair market value before the casualty will be the casualty loss.