IRS Form 4684: How to Report Casualty and Disaster Losses

TL;DR – Use IRS Form 4684 to report casualty and theft losses from a federally declared disaster. The form calculates your deductible loss, applies per-event and AGI limits (unless it’s a qualified disaster loss), and carries the result to Schedule A or allows a prior-year election under Section 165(i).

When hurricanes, floods, or wildfires hit, the IRS provides tax relief through Form 4684, also known as “Casualties and Thefts.” This is the form you use to report disaster-related property losses and determine how much of that loss is deductible.

The official instructions walk you through each step — calculating the decrease in value, subtracting insurance reimbursements, and applying the required AGI thresholds or special disaster rules.

Whether your home was damaged or your business property was destroyed, this form determines how much relief you can claim. In this guide, we’ll break down each section, explain the calculation rules, and help you avoid common mistakes — so you can claim the full deduction you’re entitled to.

📌 Learn more in our Disaster Tax Relief Pillar Guide.

What Is IRS Form 4684?

IRS Form 4684, titled “Casualties and Thefts,” is used to report property losses caused by disasters or theft. It calculates your casualty loss deduction and determines how that loss flows to your tax return.

You’ll use it for:

• Casualty events: Sudden, unexpected events like hurricanes, tornadoes, floods, earthquakes, or wildfires
• Theft losses: Deductible only if the personal-use property is tied to a federally declared disaster. Ponzi scheme losses are treated as theft losses (not investment losses). They are tax deductible and reported on Form 4684.
• Qualified disaster losses: Certain disasters that receive special tax treatment, such as waived AGI limits or direct reporting on Form 1040

Once eligibility is confirmed, Form 4684 calculates your deductible amount, applies the $100-per-event and 10% AGI rules (if required), and transfers the final number to the appropriate section of your return.

Step-by-Step Instructions for Form 4684

IRS Form 4684 is divided into sections for different types of property and losses. Follow these steps to complete the form correctly and ensure you report your casualty loss accurately. 

Refer to the images below for a visual guide for entering information in each section of IRS Form 4684. Use the Form 4684 Reference Table: Sections and Parts Explained at the end of this guide for quick reference when entering key information.

📘 Official IRS Resource: IRS Instructions for Form 4684

Section A: Personal Use Property

Overview: Section A of IRS Form 4684 is for reporting losses to personal-use property, such as your home or belongings, that were damaged or destroyed in a federally-declared disaster. It helps you calculate how much of your loss you can deduct on your tax return.

Follow these steps to complete Section A of IRS Form 4684 for personal-use property:

• Header and Identification: Shows where to enter your name, tax year, and identifying number (SSN for individuals; EIN for businesses) at the top of the form.
• FEMA Reference: Check the checkbox and line to enter the disaster declaration number, which confirms that your loss qualifies for special tax relief.

📝 Note: FEMA issues two main disaster declarations:

DR-####: Disaster Declaration (for major disasters like hurricanes, floods, or wildfires)

EM-####: Emergency Declaration (for smaller-scale or preemptive federal emergencies)

• Line 1: This is where you describe each affected property, including its type (such as Primary Residence or Secondary Rental), city, state, ZIP code, and the date acquired.

Next, complete the calculation portion of Section A on IRS Form 4684, which determines the deductible loss for personal-use property damaged in a federally-declared disaster:

• Line 2: Enter the cost or other basis of your property (what you originally paid, plus improvements).
• Line 3: Enter insurance or other reimbursements you received or expect to receive.
• Line 4: Leave blank if line 2 is more than line 3; otherwise, use this for any gain from reimbursement exceeding cost.
• Line 5: List the fair market value before the casualty or theft.
• Line 6: List the fair market value after the casualty or theft.
• Line 7: Subtract line 6 from line 5 to find the decrease in fair market value.
• Line 8: Enter the smaller of line 2 or line 7 — this is your preliminary loss.
• Line 9: Subtract line 3 from line 8 — this is your loss after reimbursements.

📝Note: Only personal-use property is shown here—income-producing or rental property is handled separately in Section B (lines 20–27).

• Line 10: Add all losses from line 9 for each property.
• Line 11: Subtract $100 for each casualty event (the $100-per-event floor).
• Line 12: If zero or less, enter “0” — this adjusts your total loss
• Line 13: Add totals from all Forms 4684 if filing for multiple events.
• Line 14: Combine losses if none are from a federally declared disaster.
• Line 15: Used only if you have gains offsetting losses; most disaster filers skip this.
• Line 16: Add lines 13 and 15 for your total remaining loss.
• Line 17: Subtract 10% of your Adjusted Gross Income (AGI) — the 10% AGI limitation.
• Line 18: The result is your final deductible casualty loss, which carries to Schedule A on your tax return.

📘 Tip: If your loss stems from a qualified disaster, the IRS gives you special breaks—like waiving the 10% AGI rule and letting you claim directly on IRS Form 1040.

👉 Read our full Qualified Disaster Loss Guide here

⚠️ Pro Tip: Save everything, including insurance emails, repair estimates, photos, and appraisals. If the IRS ever asks questions, your documentation is your safety net. Keep records for at least three years from the date you file the return claiming the loss, and longer if you file amended returns.

Source: IRS Form 4684 Instructions

Section B: Business and Income-Producing Property

Overview: Section B of IRS Form 4684 covers business casualty losses and rental property losses, which are calculated differently from personal-use property. 

Unlike Section A, these losses are not subject to the $100 or 10% AGI limitations. This section ensures that business-related disaster losses are accurately calculated and reported on IRS Form 4797 for tax purposes.

Part I: Business and Income-Producing Property

To complete Part I: Casualty or Theft Gain or Loss, you’ll enter the property description, cost or adjusted basis, insurance or reimbursements received, and fair market values before and after the disaster.

• Line 20: Enter the cost or adjusted basis of your business or rental property.
• Line 21: Enter insurance or other reimbursements received or expected.
• Line 22: If line 20 is more than line 21, skip this line; otherwise, record any gain from insurance exceeding cost.
• Line 23: List the fair market value before the casualty or theft.
• Line 24: List the fair market value after the casualty or theft.
• Line 25: Subtract line 24 from line 23 to find the decrease in value.
• Line 26: Enter the smaller of line 20 or 25 — this represents your preliminary loss.
• Line 27: Subtract line 21 from line 26 — the result is your business or rental property loss after reimbursements, carried to line 28.

💡 Note: Unlike personal-use property, the $100-per-event and 10% AGI reduction rules do not apply.

💰 Tip: For business or income-producing property, the $100 per-event and 10% of AGI limits do not apply. However, losses remain limited to the property's adjusted basis and are reduced by any insurance reimbursements.

Source: IRS Pub. 547, Business Property Losses

Part II: Summary of Gains and Losses

Part II: Summary of Gains and Losses combines all reported casualty and theft losses (personal and business) into one total. It merges figures from Section A and Section B to determine your overall gain or loss, which then carries to Schedule A or other relevant forms. 

• If gains exceed losses, they’re taxable income.
• if losses exceed gains, they may be deductible.

Here’s how each line work:

• Line 29: Identify the federally declared disaster (e.g., Hurricane Helene – Florida) and enter the total loss from the previous sections.
• Line 30: Add the amounts on line 29 to get your subtotal of losses for property held one year or less.
• Line 31: Combine columns (b)(i) and (b)(ii); this gives your total short-term gain or loss to carry to IRS Form 4797, line 14.
• Line 32: Transfers the short-term total to the appropriate form or schedule (usually Schedule A or IRS Form 1040-NR).
• Line 33: List any casualty or theft gains for property held more than one year (long-term).
• Line 34: Enter the name of the same disaster again and total long-term losses.
• Line 35: Add up the long-term losses from line 34.
• Line 36: Add the long-term gains from line 33 and 34.
• Line 37: Add all losses and gains to find your combined result.
• Line 38a / 38b: Show whether the total is a net loss or net gain; report it on IRS Form 4797, line 14 or, for individuals, on Schedule A, line 16.
• Line 39: If losses equal or exceed gains, carry the total here to close the summary and transfer to the next appropriate tax form.

Section C: Theft Loss Deduction for Ponzi-Type Investment Scheme

⚪ Note: Section C of IRS Form 4684 applies only to losses from fraudulent investment schemes (such as Ponzi schemes) and is not required for disaster-related claims. If you’re reporting physical property or storm damage, you can skip this section and continue to Section D.

Section D: Election to Deduct or Revoke Disaster Loss Claims

Overview: Section D is optional and used only for federally declared disaster losses. It lets you choose which tax year to claim the deduction or revoke a prior claim.

💡 Pro Tip: Making this election can help you receive a faster refund by claiming the loss on an earlier return.

Part I: Election to Deduct Federally Declared Disaster Loss in Preceding Tax Year

Part I: Election to Deduct Federally Declared Disaster Loss in Preceding Tax Year allows taxpayers to elect to deduct a federally declared disaster loss in the prior tax year instead of the year the disaster occurred. Attach this section to your original or amended return for the preceding year.

Part II: Revocation of Prior Election

If you previously claimed a disaster loss in a prior year but wish to revoke that election, complete Part II: Revocation of Prior Election.

For example, if a loss was originally deducted on a previous return to receive an early refund, but circumstances later change—such as receiving additional insurance proceeds—the taxpayer can revoke that election and apply the loss to the actual year of the disaster instead.

Here’s the breakdown of how to Part II:

• Line 55: Enter the name and description of the federally declared disaster and the address of the damaged or destroyed property for which the previous election was made.
• Line 56: Provide the date (mm/dd/yyyy) the original election was filed that you are now revoking.
• Line 57: Include payment or documentation explaining how you will repay any credit or refund received from the prior election being revoked.

🏚️Important: You must also repay any refund or credit received from the revoked claim.

⚠️ Reminder: The revocation must comply with the IRS deadlines under Section 26 U.S. Code § 165(i) — Election in Case of Disaster Losses

Example: Revoking a Prior-Year Disaster Loss

This example shows how to complete Part II: Revocation of Prior Election on IRS Form 4684. It demonstrates how a taxpayer might revoke a prior-year election after receiving a final insurance settlement for a property destroyed by Hurricane Idalia in Citrus County, Florida (FEMA DR-4738-FL)

Form 4684 Reference Table: Sections and Parts Explained

If you’re unsure which section of IRS Form 4684 applies to your situation, use the table below as a quick reference. It summarizes each section, part, and purpose to help you complete the form accurately after reviewing the step-by-step instructions.

Disaster vs. Non-Disaster Loss Rules

When it comes to claiming disaster-related deductions, the IRS treats federally declared disasters differently from ordinary casualty events. The rules determine whether your loss qualifies for special tax relief, faster refunds, or higher deduction limits. Here’s how the two categories compare:

Federally Declared Disasters:

• Loss may be classified as a qualified disaster loss
• Certain qualified disaster losses may not be subject to the 10% of AGI limit. In years where Congress authorizes special disaster relief, the per-event reduction may increase from $100 to $500
• Eligible for filing in prior year via amended return

Source: IRS Pub. 547, Qualified Disaster Losses

Non-Declared Disasters:

• Still deductible but requires:
• • Personal use property
  • Proper documentation
  • Insurance reimbursement subtracted
  • Must itemize on Schedule A

⚠️ Watch Out: Theft losses are tax-deductible if incurred during a for-profit trade as part of a business transaction.

Disaster Loss vs. Casualty Loss: IRS Rules Explained

Casualty Loss Calculation Example (With Table)

In May 2025, FEMA issued a federal disaster declaration for parts of Kentucky following severe tornado damage. Taxpayers in federally declared disaster areas may claim casualty losses using Form 4684.

Scenario

Jane, a homeowner in Pulaski County, experienced severe damage to her home's roof and siding.

• Estimated repair cost: $60,000
• Insurance reimbursement: $35,000
• Adjusted Gross Income (AGI): $100,000
• IRS casualty loss rules: A $100 reduction applies per event, and the remaining loss is limited to 10% of AGI.

In this example, several important tax relief options apply to Jane’s situation:

• Because the Kentucky tornado was part of a federally declared disaster, Jane is eligible for disaster-area tax relief.
• She must file IRS Form 4684 and attach it to her tax return (or an amended return).
• Under Section 26 U.S. Code § 165(i) — Election in Case of Disaster, she may choose to claim this loss on her prior-year return for a faster refund.
• If the loss qualifies as a qualified disaster loss, the usual 10% of AGI limit is waived, and the $100 reduction increases to $500.

Form 4684 Example: Tornado Damage Deduction

Here’s how Form 4684 applies to a real-world scenario involving a tornado loss.

The calculation above shows how Jane’s deductible casualty loss is determined. The table below illustrates the changes in her property and tax situation before and after the tornado.

Before and After Comparison

Sources:

• IRS Publication 547 – Casualties, Disasters, and Thefts
• IRS Form 4684 (PDF)
• FEMA Disaster Declarations

💡 Want to understand how casualty losses are calculated? Visit our Casualty Loss Deduction Guide for examples, eligibility rules, and tips to maximize your deduction.

Before you file, let’s cover the mistakes that cost taxpayers the most.

Common Mistakes When Filing IRS Form 4684

Filing Form 4684 isn’t complicated — but small mistakes can reduce your deduction or delay your refund. Here are the most common errors we see (and how to avoid them).

1. Forgetting to Subtract Insurance Reimbursements

Your deductible loss is based on what you didn’t get back.

Many taxpayers calculate their damage but forget to subtract:

• Insurance payouts
• FEMA assistance
• Other reimbursements

If you received or expect to receive reimbursement, it must be factored into your calculation. Claiming the full amount of damage without deducting insurance can trigger IRS notices or corrections.

Bottom line: Only unreimbursed losses are deductible.

2. Miscalculating Fair Market Value (FMV)

Your loss isn’t automatically the cost of repairs.

For personal-use property, the deductible amount is generally the smaller of:

• The decrease in fair market value, or
• Your adjusted basis in the property

Using repair estimates incorrectly — or skipping documentation — can result in overstating (or understating) your loss.

Tip: Keep appraisals, photos, contractor estimates, and insurance reports to support your numbers.

3. Applying AGI Limits Incorrectly

For most personal casualty losses:

• Subtract $100 per event
• Then subtract 10% of your Adjusted Gross Income (AGI)

However, qualified disaster losses may:

• Waive the 10% AGI rule
• Increase the per-event floor to $500

Mixing up these rules is one of the most common filing errors.

Know which type of disaster you’re dealing with before applying the limits.

4. Claiming Non-Qualified Theft Losses

Not all theft losses are deductible.

Under current rules, personal theft losses are only deductible if they are attributable to a federally declared disaster.

If your loss doesn’t meet that threshold, it likely won’t qualify.

5. Missing the Prior-Year Election Deadline

You may elect under IRC §165(i) to deduct a federally declared disaster loss on the prior year’s return. The election generally must be made within 6 months after the due date of the return for the disaster year, excluding extensions.

In some cases, claiming the loss on a prior-year return may result in an earlier refund, depending on your tax situation.

But the election has strict deadlines. Missing it can eliminate the option entirely.

If you’re considering a prior-year claim, timing matters.

Source: IRS Pub. 547, Disaster Area Losses

Quick Filing Checklist

Before submitting Form 4684, confirm that you:

• Verified the disaster qualifies
• Subtracted all reimbursements
• Calculated FMV correctly
• Applied the correct AGI rules
• Determined whether a prior-year election makes sense

A few extra minutes reviewing these items can save months of back-and-forth with the IRS.

How Form 4684 Flows to Your Tax Return

Here’s how Form 4684 flows through your return — so you know exactly where your disaster deduction shows up. This form links with others in your tax filing to calculate, report, and apply your disaster deduction to your taxable income.

Here’s how each part works together:

• Form 4684 – Calculates your casualty or theft loss.
• • Section A covers personal-use property (like your home or car). The deductible personal casualty loss generally carries to Schedule A (Itemized Deductions). Confirm the exact line number using the current year Schedule A instructions before filing.
  • Section B covers business or income-producing property. The loss amount is reported on Schedule C, E, or F, depending on the type of property.
• Schedule A (Itemized Deductions) – Includes the deductible portion of your personal casualty loss.
• Form 1040 – Uses Schedule A (and other schedules) to adjust your taxable income.

✨ Pro Tip: In some years, special tax relief laws let you claim qualified disaster losses even if you don’t itemize. When that applies, you can report the loss directly on Form 1040, Schedule 1, instead of Schedule A.

IRS + Legislative References

For official resources and current-year instructions, review these IRS publications:

• IRS Form 4684 PDF
• Form 4684 Instructions
• IRS Pub 547 – Casualties, Disasters, and Thefts

Final Thoughts: Navigating IRS Form 4684 is the Key to Success

Disaster losses are stressful enough. Your tax deduction shouldn’t be.

When you understand how Form 4684 works, you’re not guessing — you’re filing confidently. And that can mean a faster refund and fewer IRS headaches.

Not sure if you calculated everything correctly? That’s what we’re here for.

🖋️ Need help? Consult with a FileTax.com expert today.