If you’re claiming a vehicular loss or other personal property, the adjusted basis may be determined by the depreciation that reduces the auto’s or property’s value.
An appraisal of your property’s post-disaster value can help here. Compare that amount to your adjusted basis and the difference between the two amounts is your loss from the casualty.
Once you’ve determined your loss, use Form 4684 to figure the deductible amount of your casualty loss.
You must reduce the initial loss claim amount by any insurance or other reimbursement you have received. This also is where the aforementioned $100 reduction and 10 percent of AGI come into play in determining your final casualty loss deduction.
Deduction doesn’t equal tax refund: Now it’s time to figure out the actual tax value of your loss deduction.
Remember, the total amount of real estate, personal property and car damage losses you detail on Schedule A and transfer to your Form 1040 or 1040X doesn’t directly translate to the amount of whatever tax refund you’ll receive based on the disaster loss claim.
Just as you do every time you file a return, you must figure your taxes. This time you do so using the disaster loss deduction to determine just how much tax-wise the loss will help you’ll get back as a refund.
Yes, it’s not an easy process.
Yes, that’s particularly frustrating when you’ve already been hassling with the real-life tasks of recovering from a disaster.
But a tax professional or tax software can help you make it through the process. And the result could be a positive tax refund payout that makes it worth the trouble.
Good luck, with both making your disaster claim and getting your life back to normal as quickly as possible.