How to Access and Use IRS Form 4864 for Reporting Losses

Unexpected losses from disasters, accidents, or theft can have significant financial consequences. The IRS provides Form 4684 to help taxpayers report and potentially deduct qualifying losses on their tax returns. This form is relevant for those who have experienced property damage or loss that meets IRS criteria.

Understanding how to properly access, complete, and file this form ensures you maximize potential tax benefits while staying compliant.

Requirements for Using This Form

Not all losses qualify for tax deductions. The IRS allows deductions only for losses related to a federally declared disaster or, in limited cases, certain personal property losses. The Tax Cuts and Jobs Act (TCJA) of 2017 restricted most personal casualty loss deductions to federally declared disaster areas. Losses from isolated incidents, such as a house fire or car accident, generally aren’t deductible unless they occurred in such areas.

For business or income-producing property, different rules apply. Losses related to rental properties, investment assets, or business equipment don’t require a federal disaster declaration and can typically be deducted if they meet the IRS’s definition of a casualty or theft loss. Insurance reimbursements reduce the deductible amount—only unreimbursed losses can be deducted.

Locating and Downloading the Form

Form 4684 is available on the IRS website. Taxpayers can find it by searching “Form 4684” at [IRS.gov](https://www.irs.gov), where they can access the latest version along with instructions. The form is available as a fillable PDF for electronic completion.

Using the most recent version is crucial, as tax laws and reporting requirements change. The IRS also provides related resources, such as Schedule A for itemized deductions and Publication 547 for guidance on disaster losses.

Many tax preparation software programs, including TurboTax, H&R Block, and TaxAct, integrate Form 4684. These platforms guide users through entries and perform calculations automatically. For paper returns, the completed form must be attached to Form 1040, typically with Schedule A if itemizing deductions.

Distinguishing Casualty From Theft

The IRS defines casualty and theft losses differently. A casualty loss results from sudden, unexpected events, such as fires, storms, or vandalism. Gradual deterioration, such as termite damage or rust, doesn’t qualify. Theft losses involve the unlawful taking of property with criminal intent, including burglary, embezzlement, and fraud. Misplaced or lost items don’t count as theft losses.

Casualty losses are measured by the lesser of the property’s adjusted basis or the decline in fair market value due to the event. Theft losses are based solely on the property’s adjusted basis, as stolen assets have no remaining market value. Documentation is essential—casualty losses require repair estimates and insurance claims, while theft losses often need police reports or court records.

Calculating Recognized Losses

Determining the deductible portion of a casualty or theft loss requires assessing the decrease in fair market value caused by the event. This typically involves appraisals or repair estimates. The loss is then compared to the property’s adjusted basis—usually the original purchase price plus improvements, minus any prior depreciation. Insurance or other reimbursements must be subtracted before calculating the deduction.

For personal-use property, additional limitations apply. Under IRS regulations, a $100 reduction applies per casualty event. After this, the total remaining loss is subject to a 10% adjusted gross income (AGI) threshold, meaning only losses exceeding this amount are deductible. For example, if a taxpayer with a $75,000 AGI incurs an unreimbursed casualty loss of $12,000, the deductible portion would be $4,500 after applying the 10% limitation.

Reporting and Filing the Form

Form 4684 is divided into sections based on the type of property affected. Section A covers personal-use property losses, while Section B applies to business or income-generating assets. Taxpayers must complete the appropriate section, detailing the nature of the event, the property’s value before and after the loss, and any reimbursements received. The final deductible amount is then transferred to Schedule A if itemizing deductions or to the applicable tax form for business-related losses.

If multiple losses occur in the same year, each must be reported separately. If the loss results in a net operating loss (NOL), businesses may be able to carry it forward under current tax laws, reducing taxable income in future years. Form 4684 must be submitted with the annual tax return, typically by April 15, unless an extension is filed. If an amended return is needed due to late insurance reimbursements or revised valuations, Form 1040-X should be used to update the original filing.

Recordkeeping Essentials

Thorough documentation is necessary to substantiate a casualty or theft loss deduction, as the IRS may request proof during an audit. Records should include purchase receipts, property appraisals, and repair estimates. For theft losses, police reports, insurance claims, and correspondence with financial institutions serve as evidence. Keeping digital copies ensures records remain accessible even if physical documents are lost or damaged.

Taxpayers should retain these records for at least three years from the filing date, though longer retention may be advisable if the loss results in a carryforward deduction. If the IRS conducts an audit, organized records simplify verification. Consulting a tax professional can help ensure documentation meets IRS standards, particularly for complex cases involving business property or disputed insurance claims.