Items you will need
- Police report or other support for the theft
- Receipts for purchases
- Appraisals or online research
- Insurance paperwork
- Form 4684
- Form 1040 Schedule A
- Form 1040
Being the victim of theft is a horrible experience, whether you are robbed in person or arrive home to find your possessions missing. Insurance might cover items stolen from your home, but insurance claims are also subject to deductibles, which could exceed the value of the stolen items. Although you cannot regain the entire value of your stolen property, if you itemize your tax deductions on Schedule A, you can claim stolen property on your tax return, and may be able to gain some tax relief.
Determine whether your stolen property qualifies for the deductions. The property must have been taken illegally based on the laws of the state in which you reside, but you do not have to show a conviction. You will need proof of the date you discovered the property missing, that the property was stolen and that you were the owner of the property. A police report and receipts or pictures of the items claimed is usually sufficient support for the claim.
Make a list of all the items stolen. Gather receipts or records that will support the amount you paid for the stolen property. That amount is your cost or basis in the property. Gather information from the insurance company concerning payments made (if any) against your policy for the stolen property.
Calculate the fair market value of the items that were stolen. If the stolen items were expensive art or jewelry, it is best to get a qualified appraiser to issue an opinion on the items' value. If the stolen items were basic household items, such as stereos, computers and other electronics, then you can determine the current value of those items by searching resale sites such as eBay to see what the item would sell for if it were available for sale. Print screenshots of all the items if you are supporting your loss in this way.
Enter the detailed information on the stolen property on IRS Form 4684 — Casualties and Thefts. On Line 1, enter a description of each item stolen. On Line 2, enter the cost of the stolen property. On Line 3, enter any reimbursements you received from the insurance company. On Line 4, enter the difference between Line 2 and Line 1 only if you received more reimbursement for the property than what you paid for the property. On Line 5, enter the fair market value of the property before it was stolen. On Line 6, enter zero for the value of the property after it was stolen, unless the property was returned to you damaged. In that case, enter the fair market value of the damaged property. On Line 7, subtract Line 6 from Line 5 and enter the difference. On Line 8, choose the smaller amount between Line 2 or Line 7 and enter that amount. On Line 9, subtract Line 3 from Line 8, and enter the difference. If the difference is negative, enter zero. Note: If you have more than four items to report, use additional forms.
Follow the form instructions for reporting and totaling previously entered information for Line 10 through Line 12. Note: Total these lines for each Form 4684 used.
Follow the form instructions for reporting and totaling previously entered information for Line 13 through Line 16. On Line 17, you will enter 10 percent of your adjusted gross income (AGI) from Form 1040. Your total stolen property loss is only deductible to the extent that it exceeds 10 percent of your AGI.
Enter Line 18 of Form 4684 on Form 1040, Schedule A Line 20.
Complete the remainder of the forms necessary to file your tax return, and file your return with the Internal Revenue Service.
If you are uncertain about preparing a return with a stolen property loss, consider hiring a tax professional.
If your property is recovered after you file your return, or you receive additional insurance funds that you were not anticipating, you might need to amend your return to reflect those amounts.
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