Under most circumstances, in order to claim the casualty or theft loss, you must be claiming itemized deductions.
The new tax law roughly doubled the standard deduction to $12,000 for individuals and $24,000 for married couples filing jointly, so fewer people are expected to itemize in 2018.
When you're deducting losses related to a federally declared disaster, the rules are a little different.
In that case, the 10 percent of AGI limit doesn't apply. Filers affected by a federally declared disaster can also take the loss without having to itemize.
You should also be aware that how much you can claim as a loss will be reduced based on the insurance payout you receive for your damages.
If your losses are large enough that your deductions for the year exceed your income, you may have a net operating loss or NOL.
Individuals — not just businesses — may have an NOL from casualty and thefts.
You can use your net operating loss to reduce your tax in a previous year, which may result in a refund, according to Richards of Fiduciary Trust Company International.
Alternatively, you can use the loss to lower taxes in the future.
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