Our home was seriously damaged by flooding last year. Are there special provisions for claiming a loss since our home is located in a declared disaster area?

Casualty losses are generally deductible only in the year the casualty occurred. However, if you have a deductible loss from a disaster in an area that is officially designated by the President of the United States as eligible for federal disaster assistance, you can choose to deduct that loss on your return for the year immediately preceding the loss year. In other words, you may treat the loss as having occurred in either the current year or the previous year, whichever provides the best tax results for you.

If you have already filed your return for the preceding year, the loss may be claimed by filing an amended return, Form 1040X. For additional information on disaster area losses (including flood losses), refer to Tax Topic 515, or Publication 547, Casualties, Disasters and Thefts (Business and Non-Business). Publication 584, Nonbusiness Disaster, Casualty, and Theft Loss Workbook, can be used to help you catalog your property.

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