Is loss from hurricane Sandy deductible?
In general, any casualty loss to the extent of not being reimbursed by insurance is tax deductible as an itemized deduction. For personal use property, you can deduct the lesser of the adjusted basis of your property or the decrease in the fair market value of your property as a result of the casualty.
The loss must be reduced by any salvage value or insurance you received or expect to receive. Once this is determined, you claim the loss as an itemized deduction on form 1040, schedule A. You then subtract $100 from the loss and further reduce it by 10% of your adjusted gross income. What is left is reported on form 4684 of schedule A.
For property used in performing services, as an employee, the loss is reduced by 2% of adjusted gross income. Business and income-producing property are not subject to these limitations.
If your business property or income producing property is completely destroyed, the decrease in fair market value is not considered and your loss is the adjusted basis of the property less any salvage value and insurance received or expected to be received.
Casualty losses are generally deducted in the year incurred. However, if your area is declared a Federal Disaster area, you have the option of deducting it in the current year or in the year immediately preceding the tax year by filing an amended tax return.
Should you need to contact FEMA, their number is:
1-800-621-3362 or online at www.disasterassistance.gov