Document Unreimbursed Losses, Including Deductibles, Notes the I.I.I.
INSURANCE INFORMATION INSTITUTE
New York Press Office: (212) 346-5500;
media@iii.org
NEW YORK, March 9, 2010 — With tax day rapidly 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 for 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 five 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.
If you were the victim of a federally declared disaster you may also qualify for a broad package of tax benefits under the National Disaster Relief Act of 2008. The federally declared disaster must have occurred after December 31, 2007, but before January 2010. “To determine whether you qualify, you will first need to substantiate your property loss. Be sure to collect all receipts, insurance statements, police reports (where appropriate) along with any other documentation and present it to your tax preparer to see if you qualify,” said 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, review 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 these deductions.
The I.I.I. has free, Web-based 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 or applying for disaster aid, 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.