GENE3RALLY, you may deduct casualty and theft losses relating to your home, household items, and vehicles on your federal income tax return. What used to be deductible under old law has been suspended (meaning not deductible for the current year) with the exception of federally declared disasters.
Old law:
Under old rules, you were able to claim as itemized deductions certain personal casualty losses that were not compensated by insurance, including losses arising from fire, storm, or other casualty, or theft.
New law:
The Tax Cuts and Jobs Act (TCJA) suspends personal casualty and theft loss deduction, except for casualty losses incurred in a federally declared disaster. “Eliminates” is a more appropriate term since this deduction is scheduled to return later – much later in 2026.
Disaster area losses:
A federally declared disaster is still deductible under the old rules. Such a disaster must be declared by the President to be eligible for federal assistance under the Robert Stafford Disaster Relief and Emergency Assistance Act.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].