Casualty and Theft Losses: When Form 4684 Applies
Published November 5, 2026
A casualty or theft can damage or take property you own. Examples include storm damage to your home, a fire, or a stolen item. For most people, the tax deduction for these losses is limited. For tax years since 2018, a personal casualty or theft loss is generally deductible only if a federally declared disaster caused it. IRS: Topic no. 515, Casualty, disaster, and theft losses
Form 4684 has separate sections
You report these losses on Form 4684, Casualties and Thefts. Use Section A for property that is for personal use and is not used in a business or to earn income. Use Section B for business or income-producing property. Business property follows its own rules. IRS: Instructions for Form 4684 (2025)
The disaster rule
A personal casualty loss is deductible only if it is attributable to a federally declared disaster. Theft losses follow the same rule for personal property. A theft loss from a business or from a transaction entered into for profit may still be deductible. IRS: Topic no. 515
The $100 and 10% reductions
For a personal loss from a federally declared disaster, each casualty is reduced by $100. Then the total is reduced by 10% of your adjusted gross income (AGI). The IRS describes a net personal casualty loss as losses in excess of personal casualty gains. IRS: Instructions for Form 4684 (2025)
Qualified disaster losses
Some losses get more favorable treatment. For a qualified disaster loss, the reduction per casualty rises to $500. The 10% of AGI reduction does not apply. You can claim the loss without itemizing your other deductions on Schedule A. IRS: Instructions for Form 4684 (2025)
Ponzi-type investment schemes
Special rules may apply to theft losses from Ponzi-type investment schemes. The IRS instructions say these losses are figured in Section C of Form 4684, if you qualify to use the special rules. Read the form instructions before you claim one. IRS: Topic no. 515
Business and income-producing property
Section B covers business property and property used to produce income. For these losses, the IRS points to Publication 584-B, the Business Casualty, Disaster, and Theft Loss Workbook. Keep the workbook with your tax records. IRS: Topic no. 515
The rule starts in 2018
The disaster rule began with tax year 2018. Losses from earlier years follow older rules, so check the tax year before you use this guide. The rules above apply to a 2025 return. IRS: Topic no. 515
Example
Illustration only, with made-up numbers. Jordan's home is damaged in a federally declared disaster area. The damage is $5,000, and Jordan is not a qualified disaster loss. Jordan's AGI is $60,000. After the $100 reduction, the loss is $4,900. Ten percent of AGI is $6,000. Because the loss is smaller than $6,000, Jordan's deduction is zero.
Records to keep
Keep photos of the damage, receipts, and repair estimates. Keep any insurance claim papers. Keep your Form 4684 with your return. If you claim a disaster loss, keep the records that show the disaster area. If you are not sure whether your loss qualifies, read the IRS instructions for Form 4684 before you file. The instructions give the steps in order.
Steps to take
- Check whether the damage or theft is linked to a federally declared disaster.
- Sort each item into personal-use property or business or income-producing property.
- Apply the $100 reduction per casualty, or $500 for a qualified disaster loss.
- For a loss that is not a qualified disaster loss, apply the 10% of AGI reduction.
- Complete Form 4684 and keep your records with your return.
General information, not advice about your return.
Sources: Sources: IRS, Topic no. 515, Casualty, disaster, and theft losses (https://www.irs.gov/taxtopics/tc515); IRS, Instructions for Form 4684 (2025) (https://www.irs.gov/pub/irs-pdf/i4684.pdf) This is general information, not advice about your specific return.
