What is 'Form 4684: Casualties And Thefts'

Form 4684: Casualties And Thefts is a U.S. Internal Revenue Service Form for reporting gains or losses from casualties and thefts which may be deductible for taxpayers who itemize deductions. Taxpayers who live in federally declared disaster areas do not need to itemize deductions to file Form 4684. Casualty losses can be the result of fires, floods, and other disasters. In most cases, taxpayers can deduct losses in the tax year in which they happened. In the case of theft, the tax year is the year of loss discovery.

Taxpayers cannot use Form 4684 to deduct expenses related to personal injuries. Also, in most cases, this form only applies to personal losses, not for casualties and thefts related to the business property.

BREAKING DOWN 'Form 4684: Casualties And Thefts'

Form 4684 allows the deduction of non-reimbursed losses from specific events. Deductible casualty losses generally must result from an incident which is sudden, unexpected or unusual. Casualties include natural disasters such as earthquakes, fires, floods or storms. Other types of catastrophes include vandalism, car accidents, and shipwrecks. Provisions are also in place to assist those suffering loss from corrosive drywall and specific caustic pyrrhotite concrete. 

Even the loss of deposits in some financial institutions which become bankrupt or insolvent can sometimes qualify as a casualty. There are specific circumstances for the deduction of loss from events such as Ponzi schemes. Section C of Form 4684 contains information to complete deductions for such financial losses. 

But damage alone may not qualify a deductible casualty loss. For example, damage to a home from termite infestation or invasion of molds and fungi is not considered a casualty loss because such destruction is the result of an ongoing process, not a sudden event. Also, a car accident may result in damages, but those losses are not deductible if the taxpayer was willfully negligent in causing it.

Theft losses may include incidents of embezzlement, and larceny. These losses qualify if the theft is a crime in the state of event occurrence and if someone acted with criminal intent. Fraud may be considered theft in certain circumstances. However, if losses are the result of a decline in the price of a company’s stock because of illegal misconduct on the part of company executives, damages may not be deductible. Those losses can, however, result in a  capital loss which can offset a taxpayer’s capital gains or reduce taxable income.

Federal Disaster Area Use of Form 4684

Section D of IRS Form 4684 applies to federally declared disaster losses. Although casualty losses are usually deductible only in the tax year in which those losses happen, special provisions exist for qualified disaster losses. Losses from federally declared disaster areas have allowances to be deductible in the previous tax year and provide additional tax advantages. For an event to qualify, the loss must fall into specific geographically declared disaster areas. In 2017, these disaster areas include particular regions of Texas with damage from Hurricanes Harvey, Florida with damage from Hurricane Irma, and Puerto Rico with damage from Hurricane Maria.

Homeowners who received notification of the need to tear down or move a structure after a declared disaster may also use Form 4684 to claim a loss. These individuals may claim the difference in the home's value, pre- and post-event. However, the owner must receive notification from the building authority within 120 days of the declaration of the disaster area. 

  1. Casualty And Theft Losses

    Casualty and theft losses are deductible losses stemming from ...
  2. IRS Publication 547

    A document published by the Internal Revenue Service (IRS) that ...
  3. Personal Use Property

    Personal use property is property that an individual owns for ...
  4. Schedule A

    Schedule A is a U.S. income tax form that is used by taxpayers ...
  5. IRS Publication 536

    IRS Publication 526 offers guidance to taxpayers who have more ...
  6. Itemized Deduction

    Itemized deductions are deductions that allow taxpayers to take ...
Related Articles
  1. Insurance

    Deducting Disaster: Casualty And Theft Losses

    If you've been a victim, your losses may be deductible. Find out how.
  2. Taxes

    How to deduct stock losses from your tax bill

    Learn the proper procedure for deducting investment losses and get some tips on how to strategically structure them to lower your income tax bill.
  3. Retirement

    Top Tax Tips for Retirees

    Filing your taxes during retirement can be just as time consuming as when you were employed. We have some tips to help you out.
  4. Small Business

    Business Owners: What to Do After Disaster Strikes

    Being prepared for a natural disaster will help you take these next steps after a disaster strikes.
  5. Taxes

    9 Ways the New Tax Law Affects Millennials

    The new tax bill, the Tax Cuts and Jobs Act, includes some important changes for Millennials.
  6. Taxes

    7 Expenses You Won't Believe Are Deductible

    Many taxpayers would be surprised to discover some of the things that qualify as legitimate deductions.
  7. Taxes

    Making Sense of the 2017 Tax Changes

    Here is a brief overview of some of the changes introduced by the Tax Cuts and Jobs Act of 2017, and how they may affect your taxes.
  8. Taxes

    Insurance-based Tax Deductions You May Be Missing

    Do you know about all these insurance-related deductions? Knowing the tax deductions you're entitled to can make or break your bank account.
  9. Taxes

    Do Your Research Before Claiming These Deductions

    Be sure to read the fine print about any deduction or credit that you’re planning to claim.
  10. Taxes

    The Real Cost Of Natural Disasters

    Earthquakes, hurricanes, oil spills and other disasters have a very real cost, but who foots the bill?
Trading Center