Form 4684: Casualties and Thefts

Overview

Form 4684 is the IRS form used to report gains or losses from casualties and thefts. It applies primarily to personal property losses caused by sudden, unexpected, or unusual events (for example: fires, floods, hurricanes, earthquakes, vandalism, or certain criminal acts). Casualty losses are generally deductible in the tax year the event occurred; theft losses are deductible in the year the theft is discovered. The form is available on the IRS website.

Key takeaways

• Use Form 4684 to report personal casualty and theft gains or losses.
• Taxpayers in federally declared disaster areas can claim these losses without itemizing deductions.
• Business property losses are generally handled differently and usually do not use this form.
• Some financial losses (e.g., from Ponzi schemes or failed institutions) have special rules covered on Form 4684 (Section C).

Who should file

File Form 4684 if you have:
* A personal casualty or theft loss or gain to report, or
A loss tied to a federally declared disaster (see Section D), or
Certain financial losses (see Section C) such as those from insolvency or fraud.

Homeowners notified by a building authority to remove or move a structure after a federally declared disaster can use Form 4684 to claim the reduction in value, provided the notice is issued within 120 days of the disaster declaration.

Qualifying losses

Deductible casualty losses typically must be:
* Caused by a sudden, unexpected, or unusual event (e.g., natural disasters, accidents, vandalism), and
* Non-reimbursed (after insurance or other compensation).

Special categories covered on Form 4684 include:
* Financial losses under certain circumstances (Section C), such as those from Ponzi schemes or failed institutions.
* Losses related to corrosive drywall or specific caustic concrete conditions, where qualified.

Non-qualifying losses and limits

Losses that generally do not qualify:
* Damage from ongoing processes (for example, termite damage, mold, or rot), because these are not sudden events.
Losses resulting from willful negligence (for example, a car accident caused by intentional wrongdoing).
Declines in stock price due to corporate misconduct are typically not treated as casualty or theft losses but may result in capital losses handled under other tax rules.

Theft-specific rules

Theft losses qualify when:
* The act is a crime under the law where it occurred, and
* There is evidence of criminal intent (embezzlement, larceny, certain frauds).
Some fraud-related losses may qualify as theft; others may instead produce capital losses.

Federally declared disaster losses (Section D)

Section D of Form 4684 covers losses attributable to federally declared disasters. Special rules may allow:
* Deducting qualified disaster losses in the previous tax year (special election), and
* Broader relief for taxpayers in declared disaster areas, including not requiring itemized deductions to claim the loss.

To qualify, the loss must be tied to a geographically declared disaster area and meet the IRS criteria for a qualified disaster loss.

How to claim

1. Determine that the loss or gain qualifies under Form 4684 rules.
2. Complete the appropriate section of Form 4684 (Sections A–D depending on the situation).
3. Attach Form 4684 to your tax return, or to an amended return if claiming a past-year loss.
4. Retain documentation: insurance communications, repair estimates, police or incident reports, building authority notices, and any records of financial losses.

Practical notes

• Form 4684 primarily addresses personal losses; business property losses are treated under business tax rules.
• If you have casualty gains, certain non-disaster losses may be used to offset those gains.
• For complex financial losses or unusual circumstances (Ponzi schemes, institutional insolvency, specific construction defects), consult the relevant Form 4684 instructions or a tax professional.

Where to get Form 4684

Download Form 4684 and its instructions from the IRS website for the latest guidance and worksheets.