Unreimbursed Losses Tax Deductions
Have you suffered a business property loss in a disaster? Did the destruction result in unreimbursed loss? If so, there’s good news. When tax season rolls around, you may be able to recoup some of this loss.
Under the U.S. tax code, unreimbursed property losses can be included in itemized deductions. So if a storm or vandal destroyed your truck or fire damaged your store, you may qualify for a deduction. If the loss is not completely covered by your insurance, it may be possible to deduct some of it on your federal income tax return.
Of course, various stipulations apply. Seek assistance for proper claims and deductions from your insurance agent and a tax preparer. Generally, losses must be substantial to qualify. If an unreimbursed loss exceeds 10 percent of your gross income, it can usually be deducted. Different rules apply depending on whether the property is for business or personal use, so check with a professional to ensure that your filing adheres to proper regulations.
The year the deductions apply to may also vary. If your region has been declared a federal disaster area, you can file the deduction for the year in which the disaster occurred or the preceding year.
Whatever the situation, it’s essential to prepare documentation to support your deduction. You should collect all receipts, police reports, insurance claims, statements, and any other records involved. Keep these in an organized file for reference. This is a good practice to develop, even if you don’t think you qualify for a deduction. You never know.