J.K. Lasser's 1001 Deductions and Tax Breaks 2013: Your Complete Guide to Everything Deductible

CHAPTER 13

Insurance and Catastrophes

Alert

At the time this book was printed, Congress had not extended numerous breaks for 2012 that had expired at the end of 2011. Check the online supplement in February 2013 at www.jklasser.com or www.barbaraweltman.com to see whether these breaks apply for 2012 returns.

No one likes to think about bad things happening, but happen they do, as seen in severe winter storms throughout parts of the country, spring floods in numerous states, and the spring tornados in Kansas. Natural disasters, accidents, illnesses, and now terrorist activities and war all present serious personal and financial threats that can become reality. When faced with such catastrophes, insurance may carry you just so far, with economic losses outstripping your insurance recoveries. But you may be able to mitigate your financial losses by certain tax write-offs.

This chapter explains:

• Casualty and theft losses
• Disaster losses
• Disaster relief payments
• Damages
• Disability coverage
• Accelerated death benefits
• Legal fees
• Appraisal fees
• Damage for corrosive drywall

Mortgage insurance is covered in Chapter 4. Losses to your bank deposits are discussed in Chapter 8. For more information, see IRS Publication 547, Casualties, Disasters, and Thefts (Business and Nonbusiness); IRS Publication 584, Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property); and IRS Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas. For information ...