What is the insurance against accidents and loss of theft
Accidents and losses are theft losses deductible, which arise due to the destruction or loss of personal property of the taxpayer. To be deductible, losses from accidents needs due to sudden and unforeseen events. Loss, theft, as a rule, require evidence that the property was actually stolen and not just lost or missing.
Breaking down the ‘accident loss and theft
Loss and theft deductions losses not only to the tax office for one-time events that are out of the ordinary and not a usual part of everyday life. The event also has to be something that people are not doing when it happened. Natural disasters would qualify, including earthquakes, fires, floods, hurricanes and storms. Although losses can be incurred by natural causes, the loss cannot be claimed for something that happened over time. An example of this can be erosion of property because the process is gradual.
Human activities, such as terrorist acts and acts of vandalism are covered as well. It is noteworthy that the deduction applies only to the owner of the property. For example, if a tenant of a house damaged in a fire, the landlord will be able to claim the deduction, not the tenant. However, the tenant can take a deduction for rental payments, subject to deduction filed in the same year that the loss occurred.
The losses that were reimbursed by insurance is prohibited. In addition, taxpayers should expect insurance payments in a subsequent year for losses that were written off last year as income.
Reporting casualty and theft losses
Accidents and the loss of theft is reported under losses from accidents on the schedule of the form 1040. They are subject to a 10% adjusted gross income (agi) threshold limitations, as well as a decrease of $ 100 per loss. The taxpayer must be able to transfer the deduction to claim any personal losses.
Potential scenario: was stolen by the taxpayer’s vehicles, and also some jewelry that was in the vehicle at the time of the theft. Fair car market value was $7500 and jewelry worth $1,800. The taxpayer’s AGI for the year was $38,000. Believing that the deductions listed, the taxpayer can deduct any amount of loss above 3,800 $(10% of AGI).
General damages will be reflected as follows:
$7,500 + 1,800 $ = loss of 9,300 $
9,300 $- $100 – $100 = 9,100 $($100 reduction of losses)
9,100 $ – $3,800 = $5,300 deductible loss to be specified in table A. finally, the losses that were reimbursed by insurance is prohibited. Claims that are paid in a subsequent year for losses that were written off last year, must be taken into account as income.