Using Form 4684 to report casualty and theft losses

There’s a specific IRS tax form that reports gains and losses from casualties and thefts: it’s called Form 4684. Follow along as we cover the details, including what it is, how to file, and other Form 4684 rules including limitations that apply to tax years 2018 through 2025.

What is tax form 4684?

IRS Form 4684 is the form taxpayers use to report losses caused by casualties, thefts, or other similar events. Filing this form helps taxpayers claim deductions for losses that aren’t covered by insurance or any other type of reimbursement. Typically, you can deduct losses in the tax year in which they happened. With theft, the tax year is the year the claimed losses were discovered.

You may be eligible to claim a tax deduction on your federal income tax return when you experience a casualty or theft loss. Tax form 4684 helps determine the amount of deductible loss.

What is a casualty loss?

A casualty loss includes damage, destruction, or property loss resulting from a sudden, unexpected, or unusual event. 

What losses do not qualify for a casualty loss deduction?

• Accidentally breaking items, like glassware or china, under normal conditions.
• Damage a family pet does, unless the casualty requirements are met. Ex: Your new puppy, who’s not housebroken, damaged your antique Oriental rug. Since the damage isn’t unexpected or unusual, you can’t deduct the loss.
• Fire you willfully set or you paid someone else to set.
• Car accident if your willful negligence or willful act caused it. The same is true if someone acting for you caused the accident.
• Progressive deterioration if the damage results from a steadily operating cause or a normal process, like:
  • Steady weakening of a building due to normal wind and weather conditions
  • Deterioration and damage to a water heater that bursts. However, the damage to rugs and drapes caused by the bursting of a water heater qualifies as a casualty.
  • Most losses of property caused by droughts. To deduct it, you must have incurred a drought-related loss in one of these:
    • Trade or business, like farming
    • Transaction entered into for profit
  • Termite or moth damage
  • Damage or destruction of trees, shrubs, or other plants by:
    • Fungus
    • Disease
    • Insects, worms, or similar pests. However, a sudden destruction due to an unexpected or unusual insect infestation might result in a casualty loss.

Failure to file an insurance claim for reimbursement

If your property is covered by insurance, you must file a timely insurance claim for your loss. Otherwise, you can’t deduct the loss as a casualty or theft. However, the portion of the loss not covered by insurance, like a deductible, may still be eligible for casualty loss treatment. To learn more, see IRS Publication 547: Casualties, Disasters, and Thefts.

What’s a theft?

A theft occurs when someone takes or removes money or property with the intent to deprive the owner of it. The taking of property must be illegal and done with criminal intent.

Form 4684 rules

For tax years 2018 through 2025, you can’t claim personal casualty and theft losses on your taxes), unless your loss is caused by a federally declared disaster. The disaster may be a major disaster declaration or an emergency declaration. You will generally still use IRS Form 4684 to figure your losses and report them on Form 1040, Schedule A. An option that applies to many disaster-related casualty losses for this time period also includes claiming the loss as an additional standard deduction, as explained below. This option applies only to major disaster declarations.

Form 4684 instructions for the theft and casualty loss deduction

Follow the instructions found on Form 4684 to report gains and losses from casualties and thefts. Then, attach the form to your tax return.

How to figure out your casualty or theft loss on Form 4684

To calculate your theft and casualty loss tax deduction, determine the amount of your loss. You can do this on Form 4684:

1. Figure your adjusted basis in the property before the casualty or theft.
2. Figure the decrease in fair market value (FMV) of the property resulting from the casualty or theft.
3. From the smaller of the amounts in steps 1 and 2, subtract insurance or other reimbursement you received or expect to receive.

You will need proof that a casualty or theft caused your loss. So, keep reports from media sources and other documentation showing proof of damage or loss. You will also be required to show the FEMA declaration number on Form 4684.

To prove the amount of your loss, you should have:

• Purchase receipts for the affected property
• Receipts for improvements made to the affected property
• Pre- and post-casualty appraisals for the affected property

If these records were damaged or stolen, the IRS states you may use “other satisfactory evidence to support it (your case).”

Deducting a casualty loss in a presidentially declared disaster area

If your loss is part of a presidentially declared disaster, you can deduct the loss on your return for the tax year immediately preceding the year of the loss. If you’ve already filed your prior-year return, you can file an amended return to claim the deduction.

Claiming a qualifying disaster loss on your prior-year return:

• Could result in a lower tax for that year
• Often produces or increases a cash refund
• Might let you get your money months earlier than if you wait to claim your loss on your current-year return

Casualty loss limits

You can only deduct casualty losses that aren’t reimbursed or reimbursable by insurance or other means.

You’ll need to subtract $100 from each casualty loss of personal property. The total of your casualty and theft loss on personal property must exceed 10% of your adjusted gross income (AGI), as only anything beyond the limit is deductible.

However, for casualty losses that are qualified disaster losses:

• The dollar limit is increased from $100 to $500,
• The 10% of AGI threshold is removed, and
• The net qualified disaster loss (the qualified disaster loss less personal casualty gains) may be claimed as an additional standard deduction.

Qualified disaster losses now include personal casualty losses attributed to disasters that meet all of the following criteria:

• A major disaster was declared by the President between Jan. 1, 2020, and Feb. 10, 2025.
• The incident period for the disaster started on or after Dec. 18, 2019, and on or before Dec. 12, 2024.
• The incident period ended no later than Jan. 11, 2025.

Taxpayers who were unable to deduct disaster losses in earlier years because of the 10% of AGI threshold or because they didn’t benefit from itemizing deductions may now be able to file an amended return and claim the loss as an additional standard deduction.

Note: Depending on when the disaster occurred, the special provisions for a qualified disaster loss may not apply. For example, the rules are different for California taxpayers affected by the Los Angeles wildfires vs. taxpayers affected by hurricanes Helene and Milton. Learn more about disaster tax relief.

Amount to deduct for the theft and casualty loss deduction

The amount you receive includes the sum of:

• Insurance payments
• Value of property minus expenses you incurred while pursuing reimbursements
• Reimbursements used to pay off a mortgage or other lien on the damaged, destroyed, or stolen property

Using IRS Form 4684 to report a casualty loss or theft of a business property

If you have a casualty or theft loss to business property, like a motor vehicle or rental property:

• You don’t have to reduce the loss amount by the $100 reduction.
• The 10% of AGI rules don’t apply.

To figure the loss amount, use the property’s adjusted basis and subtract:

• Salvage value
• Insurance proceeds or other reimbursement

You’ll calculate the loss on Form 4684, Section B. The deduction may then be taken on Schedule A or Form 4797, depending on the character of the property.

Note: Business casualty and theft losses of property used in performing services as an employee can’t be deducted nor applied in the netting process to offset capital gains.

Get help filing Form 4684 Need more help with deducting casualty and theft losses? Whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible.