what is form 4684 casualties and thefts 
form 4684 is an internal revenue service irs form for reporting gains or losses from casualties and thefts which may be deductible for taxpayers who itemize deductions casualty losses can be the result of fires floods and other disasters in most cases taxpayers can deduct losses in the tax year in which they happened in the case of theft the tax year is the year of loss discovery who can file form 4684 casualties and thefts taxpayers reporting gains or losses from a casualty or theft should file form 4684 homeowners who received notification of the need to tear down or move a structure after a federally declared disaster may use form 4684 to claim a loss these individuals may claim the difference in the home s value pre and post event however the owner must receive notification from the building authority within 120 days of the declaration of the disaster area 1casualties and thefts of personal property are only deductible if they can be attributed to a federally declared disaster the irs allows an exception to this rule for individuals who have personal casualty gains in that case the taxpayer can use casualty and theft losses not attributable to a federally declared disaster to offset the gains taxpayers who live in federally declared disaster areas do not need to itemize deductions to file form 4684 taxpayers cannot use form 4684 to deduct expenses related to personal injuries form 4684 is available on the irs website 2in most cases this form only applies to personal losses not for casualties and thefts related to the business property once you have determined that your casualties or thefts qualify for a deduction complete form 4684 and either attach it to your return or to an amended return for a past claim to deduct federally declared disaster losses for the preceding tax year complete section d of form 4684 special considerations when filing form 4684form 4684 allows the deduction of non reimbursed losses from specific events deductible casualty losses generally must result from an incident that is sudden unexpected or unusual and took place during a federally declared disaster casualties include natural disasters such as earthquakes fires floods or storms other types of catastrophes include vandalism car accidents and shipwrecks provisions are also in place to assist those suffering loss from corrosive drywall and specific caustic pyrrhotite concrete 3even the loss of deposits in some financial institutions which become bankrupt or insolvent can sometimes qualify as a casualty there are specific circumstances for the deduction of loss from events such as ponzi schemes section c of form 4684 contains information to complete deductions for such financial losses however damage alone may not qualify as a deductible casualty loss for example damage to a home from termite infestation or invasion of molds and fungi is not considered a casualty loss because such destruction is the result of an ongoing process not a sudden event also a car accident may result in damages but those losses are not deductible if the taxpayer was willfully negligent in causing it 4theft losses may include incidents of embezzlement and larceny these losses qualify if the theft is a crime in the state the event occurred and if someone acted with criminal intent fraud may be considered theft in certain circumstances however if losses are the result of a decline in the price of a company s stock because of illegal misconduct on the part of company executives damages may not be deductible however these losses can result in a capital loss which can offset a taxpayer s capital gains or reduce taxable income 5form 4684 and federal disaster areassection d of irs form 4684 applies to federally declared disaster losses although casualty losses are usually deductible only in the tax year in which those losses happen special provisions exist for qualified disaster losses losses from federally declared disaster areas have allowances to be deductible in the previous tax year and provide additional tax advantages for an event to qualify the loss must fall into specific geographically declared disaster areas 6according to the irs for the tax year 2021 a qualified disaster loss also includes an individual s casualty or theft of personal use property that is attributable to a major disaster that was declared by presidential declaration that is dated between january 1 2020 and february 25 2021 inclusive however in order to qualify the major disaster must have an incident period beginning between december 28 2019 and december 27 2020 inclusive further the major disaster must have an incident period ending no later than january 26 2021 however this change does not include those losses attributable to a major disaster that has been declared only by reason of covid 19 7