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
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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.
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