Form 4684
Candlefocus EditorEligible losses incurred due to a federally declared disaster can include loss of personal property such as your home, valuable possessions, or business building, as well as the loss of business income and/or extra expenses associated with restoring or rebuilding. Additionally, disposing of damaged property must also be reported on Form 4684.
Taxpayers that live in federally declared disaster areas do not need to itemize deductions in order to report their casualty losses. When filing Form 4684, taxpayers must follow certain steps, such as determining the casualty loss deductions, calculating the net worth of the lost items before the disaster, and allocating any compensation/insurance proceeds to the loss items.
Once the casualty loss deductions and other related calculations have been made, taxpayers should then complete Form 4684. Upon completion, they will need to file the form with their tax return, and they should attach any documents that relate to their disaster losses. This can include bank statements, records of extra expenses, and photos or other documentation that show the degree of property damage. Additionally, taxpayers must also include a signed copy of Form 4684 when submitting the form with their tax return.
Form 4684 is a beneficial tool for taxpayers who have suffered a loss due to a federally declared disaster. By using this form, taxpayers can potentially gain deductible status for their losses, in addition to the other support measures offered to those that have experienced the damage, destruction, or loss of property due to the disaster.