Casualty Loss Deduction - the 10% Killer
Answer:
Many disaster victims won’t qualify for any personal casualty loss write offs because of the following two rules.
1, you must reduce your loss by $100. Obviously, that’s no big deal. THEN you must further reduce the loss by an amount equal to 10% of your adjusted gross income (AGI) for the year. That is a big deal.
For example, If you incur a $20,000 personal casualty loss this year and have AGI of $100,000. Your write off is $9,900 ($20,000 - $100 - $10,000). You get absolutely no tax break if your loss before the 2 required subtractions is $10,100 or less.Also you have to Itemize your deductions to use the casualty loss deduction.
1, you must reduce your loss by $100. Obviously, that’s no big deal. THEN you must further reduce the loss by an amount equal to 10% of your adjusted gross income (AGI) for the year. That is a big deal.
For example, If you incur a $20,000 personal casualty loss this year and have AGI of $100,000. Your write off is $9,900 ($20,000 - $100 - $10,000). You get absolutely no tax break if your loss before the 2 required subtractions is $10,100 or less.Also you have to Itemize your deductions to use the casualty loss deduction.
