The following paragraphs explain changes to casualty and theft losses that were caused by Hurricane Katrina, Rita, or Wilma. For more information, see Publication 547.taxmap/pubs/p4492-003.htm#TXMP65d35f3e
The following losses to personal use property are not subject to the $100 or 10% of adjusted gross income limits.
- Losses that arose in the Hurricane Katrina disaster area after August 24, 2005, and that were caused by Hurricane Katrina.
- Losses that arose in the Hurricane Rita disaster area after September 22, 2005, and that were caused by Hurricane Rita.
- Losses that arose in the Hurricane Wilma disaster area after October 22, 2005, and that were caused by Hurricane Wilma.
Qualifying losses include losses from flooding or other casualty, and from theft, that arose in the hurricane disaster area and that were caused by the hurricane.
Casualty and theft losses are generally deductible only in the year the casualty occurred or theft was discovered. However, Hurricane Katrina, Rita, and Wilma are Presidentially declared disasters. Therefore, you can elect to deduct losses from these hurricanes on your tax return for the previous year. If you make this election, use the following additional instructions to complete your forms.
Individuals filing or amending their 2004 tax return whose only casualty or theft losses to personal use property claimed on that return were caused by Hurricane Katrina, Rita, or Wilma should write "Hurricane Katrina," "Hurricane Rita," or "Hurricane Wilma" at the top of Form 1040 or 1040X. They must also complete and attach the 2004 Form 4684 and write "Hurricane Katrina,""Hurricane Rita," or "Hurricane Wilma" on the dotted line next to line 11 and enter -0- on lines 11 and 17.
Individuals filing or amending their 2004 tax return who also have casualty or theft losses to personal use property not related to Hurricane Katrina, Rita, or Wilma should disregard the caution directing taxpayers to use only one Form 4684, located above line 13, and complete lines 13 through 18 on two Forms 4684.
- The Form 1040 or 1040X and the first Form 4684 should be prepared as explained above for Hurricane Katrina, Rita, or Wilma losses only.
- The second Form 4684 should be prepared in the normal manner for all gains and non-Hurricane Katrina, Rita or Wilma losses.
- If both Forms 4684 have a loss on line 18, they should carry the combined losses from that line to Schedule A (Form 1040), line 19.
- If there is a gain on line 15 of the second Form 4684, disregard the instruction to enter it on Schedule D (Form 1040), and instead enter on Schedule A (Form 1040), line 19, the excess of the loss from the first Form 4684 over the gain on line 15 of the second Form 4684.
You must make this election to claim your casualty or theft loss in 2004 by the later of the following dates.
- The due date (without extensions) for filing your 2005 income tax return.
- The due date (with extensions) for filing your 2004 income tax return.
If you are a calendar year individual taxpayer, you have until April 17, 2006, to amend your 2004 tax return to claim a casualty or theft loss that occurred during 2005.