Is Theft / Casualty Losses Tax Deductible? 2026 Guide
It Depends
It depends. Business property theft and casualty losses are deductible. However, personal casualty losses were eliminated by TCJA except for federally declared disasters.
IRS Form: Schedule C, Line 27
Conditions & Requirements
- Business property losses are deductible on Schedule C
- Personal casualty and theft losses were eliminated by TCJA (2018-2025) except for federally declared disasters
- Must reduce loss by insurance reimbursement
- Loss must be sudden, unexpected, or unusual (casualty) or from criminal activity (theft)
- Must file a police report for theft losses
What the IRS Says
Under IRC Section 165, business casualty and theft losses remain deductible on Schedule C. The loss equals the smaller of your adjusted basis or the decrease in fair market value, minus any insurance reimbursement. For personal property, TCJA suspended the casualty and theft loss deduction for 2018-2025, except for losses in federally declared disaster areas. Business property losses are reported on Form 4684.
Documentation You'll Need
- ☑Police report (for theft)
- ☑Insurance claim documentation and reimbursement records
- ☑Original purchase receipts or appraisals showing the property value
- ☑Photos of damage (for casualty losses)
- ☑Description of the event with date and circumstances
Typical Deduction Amount
$0 - $10,000+/yr (varies widely)
Estimated range for most freelancers and self-employed individuals
Keeping Your Theft / Casualty Losses Receipts Straight
Knowing theft / casualty losses qualifies is the easy part. Proving it eleven months later, from a receipt that faded in your glovebox, is where this deduction usually gets lost. Photograph the receipt when you get it and TaxTidy reads the vendor, the amount and the date off it in about three seconds, then files it under Schedule C, Line 27 — the same line you'll claim it on.
The documentation checklist above is the part most people only think about in April. Your Audit Readiness Score keeps it in front of you all year: it counts the expenses with no receipt attached, the ones still sitting uncategorized, and the ones missing a date or a vendor name. You see the gaps while you can still fix them.
If you are unsure whether a particular theft / casualty losses charge counts, ask Fin. He answers in plain English, using your actual expenses — not a generic help article.
Related Deductions
Frequently Asked Questions
Can I deduct stolen business equipment?
Yes. Theft of business equipment is deductible on Schedule C, reduced by any insurance reimbursement. File a police report and document the value of the stolen property.
What about personal property stolen from my car?
Personal theft losses are not deductible for 2018-2025 under TCJA. However, if the stolen items were business property (tools, equipment, laptop), the business portion is deductible on Schedule C.
Are flood or fire losses to my business deductible?
Yes. Casualty losses to business property from floods, fires, storms, and other sudden events are deductible on Schedule C. Reduce the loss by any insurance proceeds. Report on Form 4684.
TaxTidy provides expense organization tools based on the most current US tax law available to it. TaxTidy is not a CPA, Enrolled Agent, or licensed tax professional. All categorizations, deductions, and tax calculations are estimates. Please verify all data for accuracy and consult a certified tax professional before filing.
Start With Your Theft / Casualty Losses Receipts
Photograph them, let TaxTidy sort them by Schedule C line, and watch your Audit Readiness Score climb. Your first 25 scans are on us — free for life, no card required.
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