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Beginning January 2018–December 2025, personal casualty losses are nondeductible unless attributable to a federally declared disaster.

How the tax reform affects personal casualty losses

If your client suffers a personal casualty loss from a disaster declared by the president under Section 401 of the Stafford Disaster Relief and Emergency Assistance Act, your client can claim a personal casualty loss as an itemized deduction, subject to the $100-per-casualty and 10%--of-adjusted-gross-income (AGI) limitations.

If your client has personal casualty gains, you can still offset personal casualty losses against those gains, even if their losses aren't considered a federally declared disaster.

Qualifying for personal casualty losses under the tax reform

Follow these steps to qualify for personal casualty losses under these guidelines:

1. Go to Screen 17, Dispositions.
2. Scroll to the Casualties and Thefts (4868) section.
3. Enter your Description (fire, robbery, etc.).
4. Enter a 1 in the field 1=personal, 2=business, 3=income, 4=employee.
5. From the options in the Disaster loss (Ctrl+T) dropdown menu, select Federally declared disaster, occured in 2018, 2019 or 2020.