Casualty losses must generally be deducted in the tax year in which the loss event occurred. However, if you suffered a loss in a federally declared disaster area, you may deduct your loss in the preceding year.
To do this, you must file an amended tax return for the preceding year, and figure the loss and the change in taxes exactly as if the loss actually occurred in that preceding year. If you did not itemize your deductions in that preceding year, you can go back and add any other itemized deductions (such as mortgage interest, taxes, charitable contributions, etc.) that you would have been able to deduct in that year You generally must make this choice by the due date (not including extensions) for the tax return of the year that the loss actually occurred.
 |
Save Money
If your losses were very large, and exceed your income for the year, you may have a net operating loss (NOL) for the year. You can use an NOL to lower your taxes for a previous year, allowing you to get a tax refund for the earlier year.
You don't have to be in business to claim an NOL due to a casualty or theft loss, but the rules for claiming NOLs are fairly complex, and we recommend that you consult your tax advisor for advice on the mechanics of amending your prior year's return to claim this deduction.
|
|
