Unfortunately, many are awakened this morning by another shocking reality. Many homeowners believe incorrectly that they are covered by insurance for damages arising out of earthquakes and other natural disasters. However, most homeowner's insurance does not pay for common geological processes including floods, hurricanes and earthquakes.
The good news is that you may generally deduct casualty losses relating to your home, household items and vehicles on your Federal tax return if the loss is not covered by insurance. If loss occurred to personal-use property or is not completely destroyed, you may deduct the lesser of the adjusted basis of your property or the decrease in fair market value of your property. The deductions are made on Form 4684-A for individuals and 4684-B for businesses.
Call us at 405-607-1192 to navigate you through the nuances of these deductions.