You May Be Able to Deduct a Portion of Uninsured Losses from Your Taxes; Document Unreimbursed Losses, Including Deductibles, Notes the I.I.I.

INSURANCE INFORMATION INSTITUTE
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NEW YORK, March 12 2008 — With tax day approaching, taxpayers are sifting through their files to assess last year's gains and losses. If you suffered a loss of personal property not entirely covered by insurance, a portion of the unreimbursed loss may be an allowable deduction on your federal income tax return, according to the Insurance Information Institute (I.I.I.).

“If your home, car or boat was damaged or destroyed by a windstorm, fire, flood, vandalism or other sudden and unexpected disaster, you may be able to deduct a portion of the loss from your taxes,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson at the I.I.I.

To qualify for the deduction, these losses usually need to be substantial. If you were significantly underinsured or had a large catastrophe deductible, you may have a sizable unreimbursed casualty loss.

“Generally, you can deduct the loss to the extent it exceeds 10 percent of your adjusted gross income, less one hundred dollars," said Anthony Orlando, of the New York based accounting firm Feuer and Orlando LLP.

"If the property is used in a trade or business, slightly different rules apply, so it is important to ask your tax preparer for assistance,” Orlando noted.

“Be sure to collect all receipts, insurance statements, police reports (if appropriate) and other documentation and present it to your tax preparer to see if you qualify,” added Salvatore.

According to Orlando, medical expenses exceeding 7.5 percent of your adjusted gross income may also qualify for a deduction.

If you prepare your own tax returns, be sure to review the "Nonbusiness” section of Publication 547, Casualties, Disasters, and Thefts (Business and Nonbusiness), and Publication 502, Medical and Dental Expenses (Including the Health Coverage Tax Credit), available on the Internal Revenue Service Web site. You can also contact your state income tax bureau to learn more about both the federal and state guidelines for this deduction.

For more information about insurance, visit the I.I.I. Web site.

The I.I.I. also has free, downloadable software for creating a home inventory, available at KnowYourStuff.org, which can help you to keep track of the value of your personal possessions when filing claims and to substantiate losses if you have suffered an unreimbursed insurance loss.


The I.I.I. is a nonprofit, communications organization supported by the insurance industry.