J.K. Lasser's 1001 Deductions and Tax Breaks 2022, 2nd Edition

CHAPTER 12Insurance and Catastrophes

1. Casualty, Theft, and Disaster Losses
2. Economic Impact Payments
3. Disaster Relief Payments
4. Damages
5. Disability Coverage
6. Accelerated Death Benefits
7. Legal Fees
8. Identity Theft Losses
9. Tax Identity Theft and Relief

No one likes to think about bad things happening, but happen they do. The COVID‐19 pandemic impacted people and businesses in every state in 2021. Natural disasters, accidents, building collapses and explosions, rioting and 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. If the losses to personal‐use property occur in federally‐declared disaster areas, you may be able to deduct them.

This chapter explains the tax rules related to insurance and certain catastrophes. Mortgage insurance is covered in Chapter . 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 2194, Disaster Resource Guide for Individuals and Businesses.

Casualty, Theft, and Disaster Losses

Things happen beyond human control, such as hurricanes and wildfires, that damage or destroy property. If there is insurance, it may only partially cover the loss. For 2018 ...