The federal government occasionally gets criticised for its lack of creativity.But the IRS’ list of tax-deductible casualty events covers way more ground than you could ever imagine.
If you can certify you’ve lost money or sustained property damage as a result of one of these events, you can deduct the loss from what you would otherwise owe on your taxes.
Here are the most interesting sources, in addition to car accidents, floods and fires:
- Volcanic eruptions
- Sonic booms
- Mine cave-ins
- Kidnapping for ransom
- Terrorist attacks
- Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster
The IRS also goes into intense detail in explaining why pet damages are not tax deductible:
Family pet. Loss of property due to damage by a family pet is not deductible as a casualty loss unless the requirements discussed earlier under Casualty are met. Example: Your antique oriental rug was damaged by your new puppy before it was housebroken. Because the damage was not unexpected and unusual, the loss is not deductible as a casualty loss.
The IRS also has something to say about how you can determine Fair Market Value of property:
“Sentimental value. Do not consider sentimental value when determining your loss. If a family portrait, heirloom, or keepsake is damaged, destroyed, or stolen, you must base your loss on its FMV.”
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